The development of AI, stronger computers, and big data allow automation to take on more complex tasks than ever before. This is impacting many industries, including retail. While the industry has been slower to adopt these technologies than others, according to AI and Automation in Retail study, pressure to be more productive pushes it to invest in retail software development services.
Driven by a need for efficiency and managing labor shortages, retailers are rapidly automating stores, with some expecting a near-tripling of automated tasks by 2025.
While advancements in retail automation using robotics, AI, and IoT have significantly transformed the industry, there remains significant room for further development and optimization. Let's examine these technologies and their use cases in retail.
Examples of robotics applications in retail
A McKinsey Global Industrial Robotics Survey results show that industrial companies plan to significantly increase their spending on robotics in the next five years. Retail and consumer goods are expected to be the biggest spenders, followed by logistics and fulfillment.
Examples of robotics applications in retail include:
1. Improving warehousing and inventory management:
- Automated storage and retrieval systems (ASRS): Robots manage storage with precision and speed, minimizing delays and maximizing efficiency. ASRS utilize computer-controlled machinery to move and store pallets, boxes, or other loads within a designated storage area.
- Accurate stock levels: Robots with advanced sensors track inventory in real time, preventing stockouts and overstocking. Warehouse stock robots use sensors, cameras, and mapping to monitor stock levels, detect errors, and automate tasks like identifying low stock early, improving efficiency, and reducing costs.
- Streamlined picking and packing: Robotic systems pick and pack items accurately, accelerating order fulfillment and boosting customer satisfaction. They come in various designs for specific tasks, but all share a core structure: a mounted arm with a specialized gripper that can move objects between different surfaces (stationary or moving). To perform these tasks with precision, robots rely on 3D vision.
2. Enhancing the shop floor customer experience:
- Customer service and assistance: Robots provide information, answer questions, and offer personalized recommendations. In retail, robots can answer questions and provide information at kiosks, especially helpful in busy locations like malls. Additionally, customer support robots like chatbots can handle routine inquiries, freeing up human staff for more complex issues and improving overall service efficiency.
- Shelf restocking: Space-aware robots keep shelves stocked with popular items. They navigate store shelves using a digital map, identify low stock with sensors, and prioritize restocking based on real-time data and past sales.
3. Robots at the checkout and beyond:
- Robot-assisted checkouts: These systems expedite checkout for a faster and smoother experience.
- Seamless deliveries: Utilizing real-time traffic data and factoring in multiple stops, robots map out the most efficient delivery routes, minimizing shipment times and contributing to a more sustainable delivery process. This not only translates to faster deliveries for customers but also reduces the environmental impact.
Many leading companies are adopting innovative robots to improve how they operate and serve customers. These robots are helping to streamline processes and create a better shopping experience. Amazon, for instance, has integrated robotic warehouse assistants into its fulfillment centers, significantly boosting order processing speed and accuracy. Meanwhile, customer service robots like Pepper and Nao are improving retail experiences by providing dynamic product recommendations, guiding shoppers, and fostering interactive engagements that elevate brand interaction and service quality.
AI in retail automation
As retail becomes ever more experience-driven, smooth transactions are a baseline expectation. To truly excel, retailers need an arsenal of tools, with AI leading in creating exceptional customer experiences. According to the FirstInsight 2024 survey of AI in retail, retailers consider the following applications of AI in retail most promising for their sector in the next five years:
1. Generative AI for personalized marketing & recommendation engines
GenAI tailors advertisements and suggests products based on individual customer behavior. As a result, the shopping experience becomes more engaging, and conversion rates increase significantly. Nearly half (45%) of retailers surveyed see this application as the most promising.
2. Improved predictive analytics
AI can optimize demand forecasting, inventory management, and stock needs. This leads to reduced stockouts, improved product availability, and lower inventory carrying costs. 42% of retailers consider it a worthwhile investment.
3. Enhanced chatbots & virtual assistants
Automating customer support and order processing through AI-powered chatbots and virtual assistants streamlines customer interactions and improves service efficiency.
4. Generative AI for design
AI can analyze patterns and customer preferences to propose new product designs. This data-driven approach accelerates product development cycles, leading to more innovative and successful product offerings.
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5. Fraud detection & customer sentiment analysis
AI can monitor transactions for anomalies, potentially preventing fraudulent activity. Moreover, sentiment analysis can measure customer satisfaction and identify areas for improvement.
There's some disagreement among retail leaders about the most valuable use of AI. CEOs are excited about Generative AI's potential to design innovative products, while managers focus on using AI to improve core tasks like forecasting demand and managing inventory. Despite these different viewpoints, everyone agrees that AI is a key player in the future of retail automation.
IoT in retail automation
IoT is having a major impact on the retail industry. IoT devices like sensors and cameras help track products throughout the supply chain, improve customer service, and gather data on customer behavior. This data is then used to personalize the shopping experience for customers, such as by sending them targeted promotions or offering them digital signage relevant to their interests.
IoT also enables the development of new types of payment systems, such as autonomous checkout systems that allow customers to shop and pay without waiting in line. Additionally, IoT data analytics can give retailers in-depth insights into business trends, such as what products are selling and why. This information can then be used to improve inventory management and marketing strategies. The following are examples of IoT automation in retail:
1. Inventory management
IoT sensors and RFID tags enable real-time inventory tracking, minimizing stockouts and optimizing turnover. Smart shelves equipped with IoT further automate this process by automatically monitoring product levels and triggering restocking alerts.
2. Customer experience
IoT devices like beacons track customer movement and behavior in-store, providing valuable insights into shopping patterns and preferences. This data fuels personalized marketing campaigns with targeted promotions based on customer behavior and location.
3. Supply chain visibility and efficiency
IoT sensors track goods throughout the supply chain from warehouse to store shelves, providing real-time data on shipments, logistics, and delivery times. Additionally, IoT-enabled tools optimize supply chains by streamlining logistics, warehouse operations, and inventory management.
4. Operations and security
Point-of-sale (POS) systems integrated with IoT devices streamline checkout processes, manage inventory updates, and enhance customer loyalty programs. IoT also plays a role in security and loss prevention with real-time monitoring through connected cameras and sensors that detect theft, unauthorized access, and safety hazards.
5. Environment and maintenance
IoT-connected lighting adjusts based on occupancy and natural light, optimizing energy use and reducing costs. Similarly, IoT sensors monitor environmental conditions like temperature and humidity to ensure optimal settings for products and customers. Predictive maintenance comes into play with IoT sensors on equipment and facilities, identifying maintenance needs before breakdowns occur, reducing downtime, and improving operational efficiency.
6. Customer interactions
Interactive displays powered by IoT devices engage customers with personalized content and promotions, further enhancing the shopping experience.
According to a Verizon study, there is plenty of room for robotic technology to grow in retail. While the adoption rate is low, the planned increase (2.3x) between now and 2025 indicates a growing interest in this technology for retail automation.
Read more: Retail technology trends in 2024
Wrap-up
Retail automation is transforming the industry significantly. Innovations in AI, robotics, and IoT are streamlining processes, enhancing customer experiences, and optimizing operations. While adoption rates vary, retailers across sectors are increasingly implementing these solutions to obtain a competitive advantage.
