Will robotics give Lord & Taylor and Saks an e-commerce edge?
Hudson’s Bay Company (HBC), parent of the Lord & Taylor and Saks department store businesses, announced last week that it will open “a new state-of-the-art, all-channel fulfillment center in Pottsville, PA on July 1. The facility will make use of robotic technology the retailer claims is three-times faster than the tech commonly used in e-commerce distribution centers.
“At HBC, we are laser-focused on our all-channel strategy, and this investment leapfrogs us to the forefront of internet distribution technology,” said Jerry Storch, HBC’s chief executive officer, in a statement. “As we execute on our digital strategy, we continue to invest in innovation that enables us to serve our consumers seamlessly, lead the evolution of trends in the retail industry, and expand our business which creates new job opportunities and investment in the community.”
HBC maintains that its new robotic tech will simultaneously improve output volume and accuracy at the distribution center while reducing costs. When the new center opens this summer, it will measure 450,000-square-feet. HBC plans a phased-in expansion with the center growing to 617,000-square-feet by January. The facility will support fulfillment for Lord & Taylor and Saks OFF 5th e-commerce businesses.
The retailer plans to introduce the robotic tech being used in Pennsylvania to its distribution facility in Scarborough, Ontario this fall. HBC claims the integration of the tech into the Canadian center will bring the same benefits as in the U.S. without the company having to reduce any full-time staff.
Discussion Questions
DISCUSSION QUESTIONS:
Do you see robotics as a competitive difference-maker in e-commerce fulfillment? Where do you see robotics having the greatest impact in the retail supply chain over the next decade?
Poll
BrainTrust
Bob Amster
Principal, Retail Technology Group
Gene Detroyer
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
If robotics can enable HBC to pick, pack and ship faster, with greater accuracy, sure it’s a competitive difference. Look at what Amazon has been able to do with best-in-class technology. HBC is moving to give consumers what they want — omnichannel retailing. The key is to keep products in stock, know which products are available and speed them to stores or directly to consumers. It sounds simple but is a multi-dimensional jigsaw puzzle, one that few retailers have been able to successfully solve.
No. It will help one and only one element of the supply chain process, but it all depends on the overall supply chain execution to make this portion of the retail process a true differentiator. Being with a shop that has many customers with many supply chain robotics the real trick is the overall execution system and the information feeds that control the robots. Information and retail — this will be their challenge. Robots do not re-configure as fast as humans when there are information quality issues.
There was a discussion yesterday about how the adoption of e-commerce was eroding profits at many retailers. While this implementation of robotics does not address the over-stored situation, it is one way to reduce the costs associated with running an e-commerce operation. Because this DC is being designed from the ground up for robotics, it holds the promise of being very effective and more efficient than both manual and converted facilities. Let us not forget that robotics, albeit not widely implemented in retail DCs, has been around for years in other industries and is now ubiquitous in many of those industries.
Eventually, robotics will be the next “must-have” technology to remain competitive in the fulfillment business for those merchandise categories in which it makes sense (or maybe companies will even change the packaging so that products are robot-friendly).
Robotics are already being used in manufacturing processes. Fulfillment is the next frontier.
It is not the technology itself that will bring the edge. Over time, companies should find better and faster technology to do the job. It is the definition of the job to be done that gives the competitive advantage. The operative definition of developing this technology is “all-channel.” It is a thought process that is behind technology, strategy and everything a company does.
Consumers will not care about robotics. They care whether they get the right product at the right time, undamaged. Lord & Taylor care about making a profit while doing that. Robotics have to accomplish both goals to be successful.
Any technology that can make performance more efficient, reduce expense and meet the requirements of the customer is a good thing. Every retailer should be looking and thinking that way.
I just ask, if they are shaving cost off of the picking and packing, are they upping the shipping cost by using a central facility? Are they looking at more out of stocks in the stores? All must be carefully considered and addressed.
And that’s my 2 cents.
Automation in the fulfillment center has emerged as a competitive point of difference for Amazon, which compels other all-channel retailers to invest in robotics.
Speed seems to be the primary objective for Hudson’s Bay Company in this instance, versus lowering labor costs. This is as it should be. One-day and same-day delivery is becoming a customer expectation. Since speed limits remain fixed, the best way to deliver sooner is to pick, pack and depart earlier.
Yes. Fulfillment. And to take part of Bob Amster’s answer: Eventually, robotics will be the next “must-have” technology to remain competitive in the fulfillment business for those merchandise categories in which it makes sense.
The e-commerce giants are raising the bar by continuing to shrink the lead-time on deliveries. Consumers used to be happy with two-day delivery and now they are expecting same-day or even within a couple hours, in some cases.
For retailers to meet these elevated customer expectations for “immediate” or extremely fast delivery, they need to explore innovative approaches and robotics may be one of the answers. I believe robotics will have an impact in the distribution center for pick, pack and ship for direct to consumer fulfillment. Repetitive tasks can and will be replaced by robotics where the cost benefit is attainable via hard savings (staff reductions and cost avoidance). My concern is that “best practice” dictates an eCommerce model for Department Stores that leverages a decentralized distribution model leveraging the stores as distribution points and, today, this is more for show than for go.
I am also curious how Hudson’s Bay Company can invest in the state-of-the-art robotic technology and not reduce any full-time staff. One would think that staff reductions would be a key part of the ROI for robotics technology, otherwise it is a pretty big investment just to speed up delivery times. It seems a little too good to be true….