Photo: Kroger
February 15, 2023
How much more automation is on the way, and how fast?
Technological automation continues to stoke enthusiasm among advocates and fears among detractors, with the former seeing unprecedented new ways to streamline operations and the latter concerned about the potentially devastating impact on the job market. Retail has already witnessed some major forms of automation implemented at scale, and a major player in the segment recently laid out a tight timeline along which people should expect more.
Mark Shirley, head of logistics at Primark, told Reuters late last year that the percentage of automation within the retail industry could jump to between 60 percent and 65 percent within the next three to four years. He approximated the current amount of automation in the retail sector as resting at about 40 percent.
The Reuters article, released in conjunction with the World Economic Forum, pointed to a tight labor market, rising wages and reduced customer spending as the factors pressuring retailers to automate at a faster rate. Robotic automation has already gained a foothold in areas as disparate as store cleaning, warehouse management, supply chain logistics, food ordering and grocery checkout.
Not all automated solutions, however, are proving to be popular with customers or profitable for retailers.
For instance in February, Amazon announced that its Amazon Fresh grocery chain, which uses Just Walk Out technology to do away with the checkout process, would delay the opening of new stores as the tech company seeks a way for the grocer to differentiate itself in the marketplace.
And in foodservice, McDonald’s AI-based voice ordering system recently started getting slammed on TikTok, according to a Business Insider article. TikTok videos show how customers attempting to order from the AI at the drive through become frustrated and amused as the voice bot continually fails to take their orders correctly.
Even some in logistics have warned about the potential risks of retailers investing in trendy, expensive automated solutions. Dan Myers, UK and Ireland managing director of freight firm XPO Logistics, told Reuters that,“there is always a trade off between the agility and flexibility of a human approach versus the efficiency of an automated approach.”
Discussion Questions
DISCUSSION QUESTIONS: Do you believe that 65 percent of all retail work can be automated within the next few years and, if so, what would that mean for people working in the industry? How should retailers and retail employees be preparing for the possibility of this level of task automation?
Poll
Loading …BrainTrust
Melissa Minkow
Director, Retail Strategy, CI&T
Nicola Kinsella
SVP Global Marketing, Fluent Commerce
Ron Margulis
Managing Director, RAM Communications
Recent Discussions
More Discussions
Will an In-Store Retail Tech ‘Confidence Gap’ Create Winners and Losers?
A new survey suggests that in-store retail tech could be a major factor in retailer success…Walmart’s Next CEO Era: From McMillon to Furner
Walmart CEO Doug McMillon will soon be replaced by John Furner. What’s next for the retailer?Which Brands Are Missing the Boat on Advent Calendars?
Advent calendars appear to be trending upward in popularity, with potential to move to other holidays…
Well, the industry can start by not being scared, not focusing on glitches, not saying “we tried that,” and embracing innovation and allowing teams to be upskilled.
Bill Gates famously stated that we “always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” I don’t anticipate seeing stores run by robots within the next few years. However the new tech-enabled retail models we will see by 2030 will be remarkable!
As a general rule, those tasks that are repetitive are the ones that will always be subject to improved automation. Whether that is 65 percent, or 20 percent, or 80 percent is not clear. The industry will find a way to absorb the workers left out as a result.
Although media clickbait might suggest otherwise, the transitions between now and next generally last longer than expected. That doesn’t mean retail work isn’t shifting toward automation, though consumer backlash is a real threat. Some shoppers resent automated solutions, thinking they are paying the same or even more for less service. Others don’t like the idea of automation taking jobs away from their kids. Retailers will need to offer options across the spectrum from high touch to high tech for the foreseeable future or risk alienating shoppers. In the meantime, Amazon has the right idea by creating dedicated formats that directly appeal to automation-friendly shoppers.
There’s no way 40 percent of retail work is currently automated in any channel, even e-commerce. And there’s no way 65 percent of retail work will be automated in the next five years. The tech isn’t there and the ROI isn’t there. The development of the next level of automation, which will feature micro-fulfillment centers, in-aisle robots and real frictionless checkout, requires billions of lines of new code, not to mention a dramatic reduction in the cost of the mechanical equipment. It will happen, and it will take a shorter time frame than it would have without the labor crunch, but it still won’t be prevalent until 2028 or later.
I agree that 40 percent of tasks being automated is probably a little overstated. However there is a big focus on automating repetitive tasks to improve operational efficiency. There may be some stumbles along the way, but that is why companies do pilots — to test and learn. Regarding the concern about displacing labor, it is probably not a realistic concern when there currently isn’t enough people to fill available positions.
I completely agree that there is no way 40 percent of work will be automated in any channel. The majority of the retail and grocery industry companies are saddled with decades-old technical debt, as their technology stacks which make up the foundation of their tools are still running the operations. Only after the level of technical debt is understood, managed, and ultimately decommissioned, will there be any meaningful discussions around process automation and replacing 40 percent of the work.
Automation is currently at about 40 percent? Wow — who knew. It’s very tough to make sense of this as one big round number. It feels like it would be much more productive to talk about it at a deeper level of detail. Customer facing vs back office, all the way back to the DC, transport and factory. Customer facing in apparel vs customer facing in grocery or convenience stores.
Sure, let’s aspire for efficiency in the business when it’s value adding for both the retailer and the customer. But let’s be careful that efficiency doesn’t create a soul-less experience.
While a 65 percent automation rate seems high, it’s necessary to keep companies efficient and competitive. Employees face a paradigm shift, as working with and alongside technology is non-negotiable.
Retailers and workers need to stay on top of trends, and be flexible and ready to change as retail shifts.
There are going to be growing pains as retailers attempt to maximize efficiencies via automation, especially in places where consumers are used to interacting with humans. I’m not sure what the exact balance will be percentage-wise, but it’s certainly safe to say that automation will only increase over the years as retailers get it right. It’s an iterative process.
History tells us automation eliminates jobs. It also tells us that job growth has been at a higher rate than the rate of loss. The argument that automation kills jobs goes back to Henry Ford and his assembly line. Today, automation is “destroying” jobs at an astonishing rate, yet the job market remains tight and wages rise. Why would the retail industry be any different?
When I consider the retail supply chain, delivery from the warehouse to getting the purchase in the customer’s hands, it is easy to imagine 65 percent of all retail work being automated. Maybe a better way to forecast the future of automation in retail is to ask ourselves what can’t be automated.
The accelerated rate of change and disruption is truly unprecedented. We are entering an age where the blending of the arts and sciences of retail operations is evolving into an operating model of human intuition, experience, and automation capabilities. The competitive advantages of automation are that it is an enabler of removing repetitive and redundant tasks, reduces high costs to serve, and provides opportunities for retail associates and executives to focus on far more strategic and transformative planning activities.
While there are widespread fears of significant job losses, automated processes are a welcome development, requiring companies to reimagine their roles and responsibilities to shift to a more strategic model. As companies balance driving scalability, personalization, and localization, people are very much at the center of those strategies. Automation, AI, and ML are emerging advanced tools and capabilities. However the art side of retail relies on quick decision-making, intuition, and human relationships, which machines will never replace.
While it’s great that automation is helping move along day-to-day processes, it will never completely replace face to face interaction in stores.
How about 95%?
65%? No. Not without impacting sales and affection for brands. You’re selling to humans, not machines. Those who get the best results from automation will apply the same approach those who get the best results from A.I. The goal is to augment the productivity of your humans, not replace them, because we’re a long way from automation and A.I. tools being able to handle all the exceptions that a human can process. And at the end of the day, a lot of people still crave human connection.
It’s foolish to put a percentage on “how much automation” since we are talking about a broad spectrum of retail tasks and activities. Some are repetitive “junk” work, like retrieving and packing items in a fulfillment center. Others require much human dexterity, like culling overripe and damaged produce from store displays.
I think a safe answer is that everything that can be automated, will be. But that doesn’t mean we’ll be dodging robots in the store aisles any time soon (if ever).
I don’t believe 65% will be replaced, but do believe any where we can replace repetitive tasks with automation we need to try. However, not at the expense of people. Retraining should be at the forefront of these efforts to ensure there continues to be some human interaction at the retail level. The process feels like more of an evolution and maybe it starts in other areas of the supply chain.
The automation jump of 60-65% is welcomed and overdue, but could be a challenge for retailers to adopt new technologies this fast, unless a critical unknown like Covid becomes a motivator. A lot of the technologies needed to facilitate scaling to many stores are starting to get more attention and speed. For example, image/product recognition and navigation are at the core of solutions like shelf cameras, robotics for shelf insights, checkout … its been challenging for them to scale. I think the issue for Amazon and others is scale not differentiation.
It’s important to understand where automation helps and where it doesn’t. Automation is often seen through the lens of replacing people which is wrong. We should be focusing on increasing productivity so businesses can grow more. Don’t remove the storefront employees and put machines there, that will affect your customer experience. A great place to start with automation is in the back-office and your supply chain.