Automation in the Retail Industry

Automation has been changing the face of the retail industry for decades. From the early days of factory-based robotics through to more recent developments like self-checkouts, chatbots and delivery drones, retailers have always sought ways to streamline their processes, get ahead of the competition and optimise the customer experience.

In this article, we’re going to explore some of the recent automation and technological trends in retail and consider what impact they’re having on the industry, workers and customers.

A till-free future?

Imagine walking into a store where you simply scan a QR code, choose your items and walk out – all without bypassing a checkout. Where a network of cameras and weighted shelves monitor which products you pick. Where payments are taken automatically and you receive a receipt via your phone later.

It seems like a bit of a fantastical concept, but it’s one that more and more leading grocers have been trialling in the UK over the last few years, with Amazon leading the way. The benefits of this approach include a lack of queueing, fewer out-of-stock items and reduced shrinkage. The downsides arguably include a reduction in staff numbers, and a level of technology and unfamiliarity that could be off-putting to consumers.

It’s this final point that perhaps explains why the UK’s path to a till-free future hasn’t been as straightforward as you might expect. When Sainsbury’s became the first UK retailer to launch a completely cashier-less store back in 2019, the trial only lasted three months before the company reinstated a manned till and two self-service checkouts. At the time, Sainsbury’s reported that while the new store format created excitement, “not all our customers are ready for totally till-free shopping”.

The company tried again in 2021, in a year that also saw Tesco and Aldi launch their own trials, but since then the widespread adoption of this new approach has stalled. Even Amazon, who pioneered the concept with their ‘Just Walk Out’ technology, halted plans for further expansion in 2022 and closed one of their stores earlier this year.

On paper, till-free shopping clearly has potential. But there’s a growing recognition that, as Sainsbury’s said in 2019, not enough customers are ready for it yet and that a hybrid approach with different types of checkout options is more appealing to the masses. Perhaps this will change as the younger generations that have grown up surrounded by this type of technology mature, but for the moment the idea of completely automated and cashier-less stores across the UK seems a long way away.

Creating an in-store experience

Even before Covid and the current cost-of-living crisis, the UK’s high streets were struggling. The ease and accessibility of online shopping means that retailers need to give customers additional reasons to venture out of their houses and visit a brick-and-mortar store.

Augmented reality (AR) is one of the technological innovations that some retailers have turned to in order to entice shoppers through their doors. AR works by superimposing a computer-generated image on top of what the user sees in the real world, with Snapchat filters and the popular Pokémon Go mobile game being some famous examples.

In a retail setting, examples of AR include the following:

• Virtual fitting rooms. These allow customers to try on items virtually without having to physically touch them, so that they can check the size, style and fit before buying. While the benefits of virtual fitting rooms in an online environment are clear, retailers like H&M are also installing them in their physical stores for added convenience, to support online sales and to build connections with customers.
• Augmented reality windows. These windows offer interactive experiences that help to entice shoppers into stores, such as this one that was created as part of the famous Harrods 2021 Christmas window display.
• Virtual navigation. AR navigation systems help to guide shoppers through physical stores quickly and effectively, while retailers can also use them to provide additional product information. 

AR helps customers to try-before-they-buy more efficiently, it reduces customer returns, and it increases customer and brand engagement. And given that, according to data released by Shopify, retailers who add 3D content to their stores see a 94% conversion lift on average, it’s not surprising that more and more are expanding into the augmented reality space.

Geofencing is another approach that retailers are using to engage with customers. A location-based technology, geofencing allows retailers to create a virtual fence around a physical location (such as their store) using GPS, Wi-Fi or mobile phone data. Then, when customers pass into that area they can trigger targeted marketing such as a text, in-app notification or mobile advert.

It’s a clever way for brick-and-mortar retailers to deliver offers and deals straight into the hands of their customers, to create a personalised shopping experience by providing directions to products or reminders about regularly buys, and even to target potential customers that are shopping at a rival store.

AR and geofencing, along with more online-focused approaches and technologies such as gamification and the metaverse, are some of the main ways that retailers are seeking to create the immerse shopping experiences of the future. The challenge will be how to get the most out of these digital innovations while bringing their target audiences along for the ride.

Improving the bottom line

As well as customer-facing advancements, automation is also becoming increasingly common behind the scenes in the retail sector.

Many retailers are investing in software that more effectively manages stock levels, suppliers and orders, in order to streamline processes and reduce labour costs. Innovations like providing staff with handheld devices to take instant orders in a restaurant, to check sizes in a shoe store without having to leave the customers or to ring up purchases on the floor in a clothing store are also helping to increase efficiency and levels of customer service.

Electronic shelf labels (ESLs) have long been popular overseas, but they’re starting to be seen more frequently in the UK now too. A number of leading grocers have launched trials or rolled ESLs out to their estates recently, lured by the time- and cost-saving benefits of a system where prices can be changed at the click of a button.

Case Study: Morrisons

When Morrisons decided to trial replacing in-store paper price tickets with ESLs, they contacted us to discuss their requirements and the challenge of fitting an ESL to a conventional plastic data strip.

We developed a bespoke solution that would fit their shelves and hold their ESLs securely, which were then rolled out across the trial stores.

ESLs accommodate dynamic pricing and have space for more product information than paper tickets. Some ESL systems can even help to speed up the picking and packing process for online sales as they’ll provide an illuminated route for employees to follow.

However, despite their many benefits, the response from the grocery sector hasn’t been unanimous perhaps due to the prohibitive cost of implementing such a system across estates with hundreds of stores. While it seems likely that this type of technology will eventually spread across the UK, it might take some time before every store we walk into has electronic labels on the shelves.

21st century deliveries

One of the newest – and perhaps most intriguing – retail automation trends is robot delivery systems. Co-op has been spearheading the technology’s adoption in the UK, in partnership with US-based company Starship Technologies, and now offers autonomous delivery services in Greater Manchester as well as other key cities.

The main aims of delivery robots are to reduce traffic congestion and increase access to the company’s products and services. Orders are made through an app and customers can follow the progress of their robot delivery driver in real-time through an interactive map. While the service is still very much in its infancy, it’s expanding quickly and early results appear to be positive.

Delivery drones are another automated delivery service that has been gaining significant traction over the last few years. From Boots completing the first delivery of prescription medicines to Royal Mail trialling drone deliveries in the islands of Scotland, the infrastructure is slowly falling into place to create an environment for drones as a standard delivery service.

In fact, there’s currently a project underway (and backed by the UK government) to create the world’s longest automated drone ‘superhighway’ connecting the Midlands to the south-east of England. Project Skyway has brought together leading tech companies and industry experts to establish a safe path for commercial drones and provide a framework for further drone zones in the UK.

There’s a long way to go for both delivery robots and delivery drones, but what may have once seemed like science fiction is beginning to look more like reality. And it’s not inconceivable to imagine sharing the streets with fleets of robots and the skies with delivery corridors in the future.

It’s going to be fascinating to see where automation takes the retail industry next. While some of the technologies we’ve discussed in this article have run into stumbling blocks, or we’re unlikely to see widespread adoption any time soon, the potential of the ideas is undeniable. And the impact they’re having on the industry, customers and workers is going to continue to change the face of retail for years to come.