The integration of retail automation is expected to surge at an unprecedented rate due to the need for addressing an ever-increasing cost to manage supply chains, greater investments to match new competition, the rising cost of manpower, the need for providing a better customer experience as well as address steadily surging customers’ expectations especially when the standards are being continuously raised high. The aspect of automation has emerged integral to the key strategic decisions of retail companies as there’s an upswing in the integration of workforce and task management solutions, self-checkout systems, proximity beacons, mobile devices, and digital kiosks around the world.
One of the key drivers of this market is the ascending pressure of sustaining a healthy margin which is influenced by a business environment that is filled with intense competition, rising eCommerce investments, and demand for increments in remuneration. It should be noted that the pressures of cost are not new but the option to pass on the cost to consumers as a means of cost reduction measure has been depleted especially given the hypercompetitive environment. Thus, to improve the margins retailers are increasingly turning towards automation across all the subsectors and all the functional areas. To this end a recent market development during the beginning of 2020, is pertinent wherein the introduction of a robot called SmartSight, by Zebra Technologies was reportedly announced, intended for supermarkets, mass merchants, hypermarkets, and grocers. The organization’s EMA50 enterprise mobile automation system’s workflow automation, robotic capabilities, machine learning, and computer vision are utilized by the robot to identify out-of-stock conditions, pricing inconsistencies, and planogram issues on the shelf. This provides retailers the option to reassign labor hours to more pressing matters and higher value endeavors, which are more shopper-centric. Further, the robot facilitates a higher availability of store inventory by autonomously scanning shelves which leads to generating tasks pertaining to restocking and updating on time. It also reportedly reinforces workflows like buy-online-deliver-from-store (BODFS) and buy-online-pick-up-in-store (BOPIS). Thus, by assisting retailers to minimize the issues of price mislabeling and improve price integrity as well as assisting in the reduction of out of stock instances thereby enabling them to increase basket sizes, the Zebra SmartSight solution will reportedly provide retailers the competitive edge and prevent further loss of in-store purchases to online shopping resulting in a greater degree of customer loyalty concomitantly at streamlining operations and substantial cost reduction.
Further, factors such as increasing purchasing power, penetration of internet connectivity facilitating last-mile delivery, among others are raising the scale of eCommerce to great proportions that are certainly expected to drive the retail automation market that stems from the need for streamlining the processes, among others. Along with the aforementioned, the current scenario of CoVid19, which has brought about a paradigm shift in various consumption habits and purchasing trends as well as retail and eCommerce operations is also expected to drive the retail automation market to a new echelon. As the pandemic struck, there emerged an unprecedented upshot in the demand for eGroceries had led to the extension of the duration of fulfillment to over a week in certain locations which was otherwise normally executed within a day. Thus, arose the need for integration of automation.
One recent development that finds relevance in the aforesaid case is the reported announcement by Kindred, Inc. in June 2020 about the purchase of 73 additional SORT robots by Gap Inc. which certainly needs no introduction in the global retail space. This strategic decision by the latter encompasses the installation of these robots in its U.S. distribution centers, to bring its total fleet to 106 thereby reportedly increasing its robotic foot-print significantly across its supply chain resultantly meeting the increasing customer delivery expectations. It was also reported that between 1st January 2020 and 30th April 2020 the SORT robotics systems were used by Gap Inc, to sort more than 13 million units of merchandise. This has resulted in an average sorting speed of 335 units per hour sustaining an uptime at 99.8%. Thus, in such uncertain times, integration of automation enables the retailers to scale the predictability of operations with efficiency.
Gross Domestic Product by Restaurants and Hotel Expenditure at Current Market Prices, 2015–2019, Indonesia
In billions of Rupiahs
Source: BPS-Statistics Indonesia
Additional aspects that are expected to augment the growth of the retail automation market are, for one, the favorable prospects of unattended retail services that provide consumers a fast and easy way to shop at their own pace and without the need for interacting with the store employees. It also enables consumers to shop during transit. While the aforesaid is a demand-driven factor, among others, that will drive the growth of automation market during the next few years, the supply-side-driven or vendor-driven factors that are anticipated to propel the growth of this market are the prospects of bringing about uniformity with higher quality, as well as enhancement of efficiency and ensure a well-sanitized sorting environment. Besides, the integration of automation aids in the generation of sales data swiftly in an error-free manner. Moreover, it also provides an organization with the facility to execute troubleshooting measures remotely. Besides unattended retail services, an example of the recent development of retail automation pertaining to food and beverage industry is being touched upon to provide a context and partly substantiate another dimension of the expected growth of the retail automation market as a whole, also shedding light on how emerging economies, among others, are expected to drive the market growth.
A start-up based out of Jakarta, Indonesia called Wahyoo that was founded in 2017 reportedly announced the successful raising of $5 million in Series A funding led by Intudo Ventures, a venture capital firm focused on Indonesia. Other investors included Selera Kapital, Kinesys Group, Isenta Hioe., Indogen Capital, Gratyo Universal Indonesia, Arkblu Capital, and Amatil X (the corporate venture program of Coca-Cola Amatil, one of the five largest Coca-Cola bottlers across the world). The rationale for establishing this startup is to digitize and automate more tasks ranging from ordering supplies to managing finances focusing on the small eateries, called warung makan, thus enabling them to streamline their operations and have more quality of life. This has been enabled through the features made available by the startup which include a next-day grocery delivery service from its warehouses and integration with Go Food, a popular delivery app. The startup also offers the opportunity for a warung makan owner to place advertisements and earn money. The fund was raised to facilitate hiring as more owners can onboarded, among others, Wahyoo’s tech platform development and expansion beyond the area of greater Jakarta. Above all this exemplifies the extent of penetration of automation industry to small and medium enterprises, which are one of the major forces that drive the economy.