Retail Automation

Retail Automation and The Hard Limits: It’s not a Solve-It-All

In Industry News, News by Rebecca Tan0 Comments

Retail Automation

Global retail automation is expected to have a compound annual growth rate (CAGR) of 10.96% over the period 2017–2023, showing that retailers are enthusiastically incorporating retail automation into their strategies, with no signs of slowing down. Retail automation promises to be the panacea to many retailers and mall owners’ problems, from the ability to understand their customers through massive data gathering, to the ability to provide personalized experiences and high-quality service at a reasonable cost through the use of chatbots and self-service kiosks. However, there are also many problems that simply cannot be solved with automation. So what are these limits, and how can organizations fully leverage retail automation, while having these limitations in mind?

THE GAPS IN DATA COLLECTION IN A SHARED ENVIRONMENT

Data largely exists in silos in a retail environment which prevents retailers from unlocking its true value. Often the first goal of traditional brick-and-mortar retailers is to be able to overcome the advantage that e-retailers have in terms of customer data, but this is often not possible. An online retailer such as Amazon might have complete information on a shopper’s browsing pattern and purchase history. In contrast, retailers in physical shopping malls find themselves with data on the volume and trend of products purchased, while mall owners find themselves with data such as footfall, dwell time and pattern of browsing on the other hand. Neither holds sufficient information to create a clear picture of the shoppers’ intent and fulfillment. Without this unified dataset, there is no effective way to provide targeted marketing and service to the customer.   

THE TRUST ISSUE

Trust is a touchy issue in the retail industry. In April 2017, an employee of Takashimaya of 21 years was found to have misappropriated more than $180,000 over five years, and in another case, a young employee was found to have stolen luxury watches worth more than S$305,000 from a watch boutique in Marina Bay Sands. A recent survey (2017) by the National Retail Federation also found that the shrinkage rate, which includes theft and loss of merchandise through administrative error, rose to 1.44% of total retail sales — or $48.9 billion — in 2016, compared with 1.38% — or $45.2 billion — in 2015. Surveillance could serve as a heavy-handed solution to combat this but it is rarely the answer. Not only do staff often find creative ways to circumvent the technology, more importantly, these safeguards create an atmosphere of animosity between management and staff. The best solutions are cooperative, and trust can only be built organically over time.

THE DESIRE FOR HUMAN INTERACTION, NONETHELESS

Finally, while retail automation could potentially replace every function of a human staff, human interaction is itself a quintessential element of the retail experience. According to the Global Consumer Pulse Research study from Accenture Strategy, 83% of consumers prefer human interaction over digital channels when trying to resolve a customer service issue. In-store experiences are also highly valued among consumers, with 65% of them agreeing that physical services are the best channels for getting a tailored experience and 46% of them remarking that they are more willing to be sold new or upgraded products when receiving service in person, than online. Automation, hence, should be used to empower service staffs with knowledge about customers for them to provide better customer services, instead of being used to subtract staffs from the overall equation. 

Retail automation is no doubt a game changer which drives business efficiency, but retailers need to recognize that it has its limits, and work their strategies around these hard limits

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