Retailers plan to automate up to 70% of routine store tasks by 2025 and are prioritizing tech investments that will boost operational efficiency which will lead to reduced costs and higher profits.
Those are top findings from the "2023 Connected Retail Experience" study conducted by Incisiv in collaboration with Verizon Business. The survey polled 233 total respondents, with 55% from companies with over $1 billion in annual revenue and 65% from companies with more than 500 brick and mortar stores.
At the top of the investment list is real-time inventory management — no surprise given the shaky supply chain issues ignited during the pandemic and which continue.
Deployments of AI are also projected to increase, with more department and specialty retail brands adopting it compared to grocery and general merchandise stores. In fact the use of AI to improve operations is expected to increase nine times in the next two years, according to the study.
Other technologies on the list include mobile point of sale and curbside pickup sensors as well as robotics.
Automation, according to the study, will give retailers greater opportunity to focus store associates on customer-facing and more high-value tasks, as well as increased support to business operations.
But such efforts will also put a store's network capabilities to a big test — cloud applications and increased use of devices in associates' hands means the network needs to be able to support additional traffic.
That may be one reason just 29% of retailers polled in the survey have an executive process for automation goals.
To gain deeper insight on the survey's findings and the retail march to automation, RetailCustomerExperience reached out to David Naumann in an email interview. Naumann is marketing strategy lead, retail, travel and distribution at Verizon. He has 20-plus years' experience in marketing for retail and hospitality technology and consulting companies.
Q: How would you describe where automation sits within retail today — i.e. infancy, taken root, etc.
A: The maturity level of automation depends on the industry sub-segment and the type of technology or process being automated. It is this process automation which is the practice of using technology to automate complex business processes and routine tasks that is gaining momentum. According to our research with Incisiv, retailers are expected to have 71% of tasks automated by 2025. While automation improves the productivity of labor, many retailers plan to use the benefits in various forms such as redeploying staff to operations (28%) or shifting them to more customer-facing tasks (18%).
In other words, retailers are looking for ways to integrate process automation. The level of automation likely ranges a fair bit from sector to sector, but broadly speaking, given the available data, automation certainly appears to have taken root.
Q: The data mentions retailers increasing automation of routine tasks. Can you provide a few examples?
A: Automation is an area ripe for growth, especially considering how time-consuming traditional shipping is within the order fulfillment process. Automation saves time and may reduce costs. It also gives retailers the ability to scale up operations quickly — a tremendous benefit, especially during the holiday season.
While automating the transaction process is an obvious way to potentially improve efficiency and customer satisfaction, using automation for behind-the-scenes operations processes can offer significant improvements in fulfillment accuracy and speed. Inventory accuracy and visibility is a top driver of store systems investments for 2023. According to our study, common types of process automation include real-time inventory management with 54% of specialty and department stores planning to deploy by 2025 and curbside sensors for order pickup/delivery which 36% of grocery and general merchandise stores planned to deploy by 2025.
Q: For retailers striving to embrace or expand automation what are initial priorities?
A: Any fundamental change to how a business operates invariably begins with its people. As such, it is critical to clearly communicate the benefits and rationale behind impending changes, as well as the impact said changes will have on how employees perform their duties.
Process automation and digital transformation are as much culture changes as they are technology and operations changes.
To be able to communicate those process changes clearly, organizations must be clear on their business objectives and operational strategy. This might sound straightforward, but too many organizations scrimp on this part of the process. If this foundation is solid, communicating those changes to the workforce is simplified.
Buy-in should immediately be followed by training and education. To underscore my earlier point, the success of process changes begins with people. If they understand why the changes are being made, what their roles are within those revamped processes and learn how to execute within this new framework, your new processes are in a better position to succeed.
Q: According to the study, 93% of retailers expect consumer demand for in-store connectivity to increase in the next three years and the percentage of associate tasks that will be automated will more than double. How will this impact in-store networks?
A: Retailers prioritize reducing network downtime (77%), managing peak network traffic (73%), and application response time (68%), but only a few are satisfied with their current network performance. Specifically, only 32% of retailers are satisfied with their network uptime, 25% are satisfied with their ability to manage peak traffic and 23% are satisfied with their current application response time.
To address these accelerated store connectivity needs, 5G business internet, private networks and mobile connectivity can offer retailers upgraded speed, greater bandwidth, lower latency and real-time connectivity across the retailer's business.