Retail's Battle Bots: COVID-19 Exposes True Value of Robotics
For Woodman’s Market’s Tyler Davis, the tipping point arrived with a box of graham crackers.
While auditing some of the grocer’s mis-stocks spotted by a Badger Technologies shelf-scanning robot, it was revealed the bot had detected two kinds of graham crackers: one cinnamon and one low-fat, differentiated only by a tiny banner. That was when the IT project coordinator evolved from skeptic to believer about the promise of robotics in the retail workforce.
“Otherwise, they were identical — same dimensions, brand, logo,” Davis tells RIS. “The robot spotted that and figured it out.” He was sold.
Despite a steady drumbeat of progress for retail robotics, the industry remains quite a bit away from mainstream implementation. The retailers who have integrated them, however, are singing their praises, especially during the pandemic.
Neil Saunders, GlobalData managing director of retail, describes robotics as still being somewhat embryonic in application at retail. Indeed, just 6% of respondents in RIS’ annual Retail Technology Study, fielded prior to the onset of the pandemic, cited robots, drones and driverless vehicles as a strategic imperative over the next 18 months. In the Supply Chain Technology Study, conducted in July, robots were cited within the second tier of interest in top emerging supply chain technologies.
As with most things retail tech related, the pandemic has illuminated the gap between the haves and have-nots: the retailers already investing in robotics prior to the shutdown and those that hadn’t. An e-commerce explosion abruptly demonstrated their benefits in more efficient picking, while increasing sanitizing protocols have simultaneously made them more attractive.
“These things were increasingly needed prior to the pandemic, but that accelerated them for multiple reasons, one being the rise in e-commerce,” says Jordan Speer, IDC global supply chain research manager. “There's just much more need for picking. The need for social distancing also make robots more important because you can have fewer humans working close together on the warehouse floor.”
Saunders echoes this, designating robotics as selectively helpful during the pandemic, generally within logistics and the supply chain. The rise in online orders has meant unprecedented warehouse and fulfillment center activity. “Retailers that employ robotics in those parts of their business have been able to better cope with spikes in demand,” he says.
Grocer Schnuck Markets was undergoing a 16-store pilot with Simbe Robotics’ inventory-management robot Tally when the pandemic — and panic buying — began in March. With its warehouse reaching maximum capacity, the retailer’s inventory systems were quickly getting out of sync.
By using Tally to scan shelves at its pilot stores, Schnucks was able to use the store data to resync its perpetual inventory levels. This in turn enabled the replenishment systems to order products that it would have otherwise had to manually detect and correct.
“We also used the location data to help the teammates find where an item goes on the shelf,” says Dave Steck, VP of IT infrastructure and application development at Schnucks. “With completely empty shelves in some sections and no visual reference queues for where an item belongs, the teammates simply needed to scan the UPC on the product. Based on the robotic data, we could direct them to the aisle/side/section/shelf where it belongs.”
Schnucks is also bringing Brain Corp’s autonomous floor scrubbers to more than half its stores by the end of the year, expected by the grocer to both enhance cleaning and give associates more time to dedicate to customers.
Sam’s Club, meanwhile, will bring scrubbers from Tennant Company, a Brain partner, to all of its stores starting this fall. As part of this, it’s expanding a pilot using Brain’s floor scrubber accessory to analyze shelf inventory for localizing and analyzing inventory.
Next to Amazon and its Robotics Innovation Hub, Kroger’s partnership with Ocado for up to 20 automated fulfillment centers is perhaps the most prominent example of ambitious retail investment in robotics in the United States (though it remains to be seen whether progress is jeopardized by a recent patent infringement lawsuit).
Pet e-commerce retailer Chewy is opening a new automated facility in Archibald, PA, that eliminates some manual warehouse tasks. Associates will use robotics and conveyor systems to pick orders for shipment, and once picking is complete, shipments will be sent to team members for packing. Rather than manually locating, selecting and moving products through fulfillment, they’ll leverage robotic technology and high-speed conveyance and sortation.
“Not only are we optimizing the physical layout of the building design and creating improvements in storage utilization, but we’re also minimizing and/or eliminating less efficient tasks,” Mike Gilbert, Chewy VP of fulfillment center operations, tells RIS.
The automation is expected to increase efficiency, capacity and shipment accuracy, as well as worker safety. “In addition to helping bring down the physical and environmental footprint of one of our typical fulfillment centers, we believe this facility will improve our costs as well,” Gilbert adds. “Thinking long-term, this model also offers a favorable outlook on growth with the ability to expand operations within the facility.”
Saunders expects we’ll see more retailers employ technology automating nearly all picking and packing, including solutions as micro-fulfillment centers within existing shops.
“Over the longer term, there will be more automation in delivery, with robot cars taking goods to people’s households. These areas are all high cost and can, at present, be unprofitable. Robotics will help take out cost and balance the books,” he said.
Likewise, IDC’s Speer says she sees opportunity for robotics within curbside delivery, bringing products from stores to customers’ cars.
Data Delivery
While efficiency is among the most common advantages associated with retail robotics, their benefits also extend into one of today’s most valuable commodities: data. The details collected by robots and the way they’re leveraged is playing out in several ways.
As Woodman’s, Davis says the company learned early on that the location data culled from the bots’ daily tag scanning would be valuable. “When a robot runs through one of our stores, we take every item scanned and look for insights. For example, which products haven’t sold in a while? These items need to be reviewed. Or are there any bad tags on the shelves? Does the UPC not match the product? Is a product not selling in one store but maybe selling in high volumes in others? Then maybe that one doesn’t need it and we could utilize that room for something else?”
Again, this data has translated into efficiency: Whereas employees might have to walk aisles multiple times before noticing a hole in product availability, or locating a misplaced item, the grocer’s bots deliver instant reports about items that need addressing. Likewise, when pallets arrive, items are sequenced in the order in which aisle they need to be stocked, aiding supply chain and warehouse employees.
But they also align inventory information with sales data so the retailer can decide whether products are being allocated properly across stores. Furthermore, the data collected also lets Woodman’s relay this real-time inventory availability and location details to consumers through its in-store app, providing more seamless customer experiences.
Schnuck’s is seeing similar benefits with Tally, and the retailer has brought the bot to more than half its fleet. “The amount of critical data and valuable insights that Tally continues to bring us from a select number of stores is immeasurable,” says Steck.
Well, some is measureable: Tally’s use has resulted in 14x more out-of-stock detection than manual auditing and at least 20% reduction in out-of-stock items in stores. By increasing the accuracy of the real-time inventory feeding into Schnucks’ automated replenishment system, it’s improved inventory management efficiency and streamlined ordering and replenishment.
Like Woodman’s, Schnucks leverages the real-time product location data within its Rewards mobile app for consumer and associate benefit.
Data and numbers aside, Tally’s use has resulted in benefits harder to quantify, which the company has termed the “Tally Effect.”
“The biggest surprise we discovered was during the initial pilot,” Steck says, “finding that general store conditions improved because the store teams knew the robot was taking pictures of the shelf, and they wanted to show up well.”
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Despite the clear benefits, COVID-19’s extreme disruption has forced many retailers to place them on the back burner in favor of other priorities, analysts say.
IDC research revealed that 42.3% of retailers said the pandemic had no impact on their spending plans for robotics. When asked whether they were going to increase or decrease spend in robotics as a result of the pandemic, decreases outweighed increases.
Some of the largest retailers are exceptions to this, says Bob Eastman IDC research manager, retail technology strategies, especially given the dramatic increase in focus on last-mile fulfillment, which in turn is placing upward pressure on the demand for robotics. But for many retailers, they’re simply too stressed right now.
“Retailers had to toss up their digital transformation priorities,” he says. “They've had to shift to more tactical things. Things that are more like shiny objects have — not universally, but largely — been pushed out.”
Ray Gaul, SVP of retail insights at Kantar, notes that the instability of the pandemic made it extraordinarily difficult for retailers to make decisions since what they’re experiencing — and where they’re experiencing it — can change week to week based on virus levels and government restrictions. As a result, retail executives focused on minimizing the profit losses incurred from staff shortages.
But as they become more adept at managing the disruption and using learnings from the first lockdown to inform the next one, that could change.
“Now that we're in the second wave of hard lockdowns where stay-at-home orders are coming back into effect, I think what you might see is that this upcoming period is where the robotics will start to take hold because now you’re seeing the same problem repeat itself, which didn’t happen the first time around.”
Beyond costs, implementation of robotics requires a heavy technology lift, including integrating with legacy systems and bandwidth requirements. While the advancement of 5G may help, says Eastman, that’s going to take some time. We should also expect to face more regulation around robotics as they become more popular and face more restrictions that maybe don’t even exist as heavily right now, he notes.
There are also harder to quantify challenges, such as negative perceptions from both employees and consumers.
“In the supply chain or for CSRs, consumers have negative associations with human workforce reductions — understandably in this economy,” says Tiffany Vasilchik, SVP of growth strategy at consultancy Magid. “Additionally, a significant number of consumers are still not completely comfortable dealing with robots. This lack of comfort needs to be addressed before we’ll see widespread acceptance of robots as a customer service and experience aid.”
Breaking old habits can be hard for some longtime employees, Woodman’s Davis concedes, and doing so has been a work in progress to move away from legacy practices, such as no longer hand-writing shelf tags so the robots can properly scan them.
“We’re regularly proving to our associates that the robots are here to help them and make their jobs easier. As they understand that more and more, we’re starting to see some old habits broken,” he says. “When you have almost 100,000 active items on the floor at any given time, and some 2,000 to 3,000 sale tags can start on a given day, the robot’s ability to provide reports that organize items by aisle has proven to be a big help. Operationally, this is a huge game-changer for us.”
The pandemic has also had caused many of us to crave human connection, meaning creating and sustaining human bonds is more important than ever, says Vasilchik. “Retailers who can balance the juxtaposition of deploying robotics while delivering emotionally resonant human interaction will be the winners of the future.”