Automation and AI in retail: friend or foe?

We hear a lot about the high street dying, but that’s not quite right. The high street is changing. Automation (and, in the future, AI) is changing the retail landscape. One of the reasons digital retailers like Amazon are so successful is ease-of-purchase, and this is down – in large part – to automation and AI-generated algorithms.

With the retail AI market predicted to be worth £27bn by 2025, it’s worth considering how these technologies can benefit retail, rather than threaten its existence.

Automation is helping to create efficient retailers that customers appreciate

Businesses are using robotic process automation (RPA) to speed up transactions and respond to customers who have simple queries; this means customers get the service they need faster, and employees can focus on working with customers that need specialist expertise or additional support.

While customers may not always be aware of automation directly impacting their transaction, they could find that the service they experience at particular retailers is faster or that they feel listened to rather than hurried off the phone.

For example, both insurance company Unum and consumer credit reporting agency Equifax say that they have introduced automation into their workflow processes to free “workers up from mundane tasks so that they can tackle assignments that require more judgement.”

This behind-the-scenes use of automation helps to create a more efficient service for customers.

However, other forms of automation have been criticised. For example, self-service checkouts in supermarkets and high street retailers, like WHSmith, can be frustrating to use at times. This doesn’t mean that traditional retailers can’t benefit from using automation in their stores, in their warehouses, or to manage their logistics.

The key to implementing automation successfully is that it needs to benefit the customer and make the shopping experience easier. It needs to take some of the monotony out of the experience without completely dehumanising it. In-store automation should be accessible to all customers or it risks alienating people who choose to shop in stores for a more human experience (for example, they may enjoy chatting with the person at the till).

Will automation impact jobs or just roles?

The World Economic Forum predicts that when retailers have fully adopted automation across their operations (from warehouses, to shelf-stacking, to checkouts), between 30-50% of roles currently filled by humans will be at risk. However, it also points out that the pace of adoption will depend on the investment required, balanced against the future cost of employee wages and benefits. So, individual retailers will only start using automation when it works for their organisation.

Retailers are using automation to make their operations more efficient. Amazon, for example, now uses robots in some of its warehouses.

The New York Times gives the example of one worker who used to be responsible for filling and stacking 25lb bins with products. Their job was tiring and monotonous. Then the warehouse introduced robots. A machine now stacks the crates, and the worker’s role has changed to supervising and troubleshooting four robots at once. She tells the Times that she now finds her job more challenging and less repetitive.

Automation will change people’s job roles. It will also make retailers’ operations more efficient, allowing them to invest employees’ time and money elsewhere. In the Amazon example, adding robotics to warehouses allows the online retailer to dedicate more warehouse space to inventory and reduce the amount of walking workers need to do, increasing efficiency and reducing fatigue.

Amazon has also automated its buying process. Where employees used to negotiate with suppliers and decide what to stock and when, algorithms have now taken over the role. Those who used to do the job have moved on, with some now working with brands to help them navigate Amazon’s automated systems.

Automation will fill the roles that some people currently occupy, but it will also create new roles. Gartner has predicted that by 2020, automation will start creating more jobs than it replaces.

For example, US retailer, Lowes launched the LoweBot in 2016. It’s an in-store robot that can answer customer questions, help them locate items in the store and perform real-time inventory tracking. Rather than replacing in-store staff, the LowBot acts as an alternative source of information for customers who have straight-forward questions. This frees up employees to help customers with questions that require specialised advice (for example, the employee could help the customer choose the best appliance for their needs, while the robot could provide directions to the appropriate department).

Like any technological revolution, automation and AI can be a threat to retailers, but it will also create an unparalleled opportunity to create efficiencies, innovate, and increase profits. Automation represents a shift in the way we work and, like all change, it will require people and businesses alike to plan, prepare, and adapt to make the most of their new opportunities.

Jack Barmby CEO of Gnatta. Gnatta help retailers to deliver universal customer engagement through the use of specialised software.

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