Why is Retail Automation Important?

Retail automation may sound intimidating or complicated for retailers in this modern world, but it can’t be denied that it is a necessity. It’s there to help retailers transform their establishments into efficient, engaging, and sustainable operations. So how important is retail automation? What are some examples? And how can it affect retailers and customers?

Retail automation is becoming increasingly vital in today's fast-paced and competitive market. It’s reshaping the industry as we know it, and it’s bringing various advantages to the market. Here are several reasons why automation in retail is important:

Increased Efficiency and Productivity. Retail automation streamlines various processes, such as inventory management, customer service, and checkout procedures. Automated systems reduce the need for manual labor, allowing employees to focus on more complex tasks that require human intervention. For instance, automated inventory systems can track stock levels in real-time, reorder products automatically, and reduce human error. Chatbots or customer service powered by artificial intelligence (AI) can also reduce time and labor. According to a report by McKinsey, automation, specifically generative AI, can increase productivity by up to 30-45% by reducing the time and cost spent on repetitive tasks.

Enhanced Customer Experience. Automation improves the overall customer experience by providing faster and more correct services. Self-checkout kiosks, automated customer support chatbots, and personalized marketing campaigns are some examples. Customers appreciate the speed and convenience these technologies offer. A study by Salesforce found that 61% of customers are open to using automated self-service tools, indicating a growing preference for such technologies to resolve simple issues.

Cost Reduction. By automating routine tasks, retailers can significantly cut down on labor costs. Additionally, automation reduces errors that can lead to costly mistakes. For example, an automated inventory system ensures exact stock levels, preventing overstocking or stockouts. According to a report by Capgemini, retailers can save up to 10% of their annual costs by adopting automation technologies in their order deliveries and more.

Inventory Optimization. Automated inventory management systems ensure that the right amount of stock is always available, reducing the risk of overstocking or understocking. These systems use algorithms to predict demand based on historical data and current trends. According to a study by the IHL Group, inventory mismanagement costs retailers worldwide over $1.1 trillion annually. Various retail automation solutions can help mitigate these losses by refining stock levels and improving order accuracy.

Improved Accuracy and Compliance. Automation minimizes human errors in various retail processes, such as pricing, billing, and compliance with regulations. Accurate pricing and billing ensure customer satisfaction and trust, while compliance with industry standards and regulations avoids legal issues and fines.

Labor Shortages Mitigation. With labor shortages becoming a growing concern in many regions and industries, automation can help bridge the gap by performing tasks that are difficult to fill with human labor. Automated checkout systems, stock replenishment robots, digital shelf labels, and warehouse automation reduce reliance on human workers for routine tasks.

Data-Driven Decision Making. Automation tools often come with analytics capabilities, allowing retailers to collect and analyze vast amounts of data. This data can provide insights into customer behavior, sales trends, and inventory performance. In fact, big data analysis can impact financial and economic outcomes. Retailers can make informed decisions based on real-time data, improving their strategies and operations. For example, automated systems can analyze customer purchase patterns to optimize inventory levels and personalize the marketing efforts of retailers.

Scalability. Automation allows retailers to scale their operations efficiently. As the business grows, automated systems can handle increased workloads without a proportional increase in labor costs. This scalability is particularly beneficial for brands with an omnichannel retailing approach, as well as e-commerce retailers who experience fluctuating demand.

Environmental Sustainability. Automation can contribute to more sustainable retail operations by optimizing resource use and reducing waste. For example, automated lighting and climate control systems can reduce energy consumption in stores and warehouses. Digital labels help retail stores go paperless and be more environmentally friendly. Additionally, automated inventory management minimizes overstocking, which reduces waste.

Employee Satisfaction and Retention. By automating repetitive and mundane tasks, employees can focus on more engaging and fulfilling work. This shift can lead to higher job satisfaction and retention rates among businesses. Employees can take on roles that require creativity, problem-solving, and customer interaction, which are more rewarding and less likely to cause burnout.

Competitive Advantage. Businesses that are early adopters of retail automation can gain a significant competitive edge. By leveraging advanced technologies, these retailers can offer better customer experiences, operate more productively, and adapt quickly to market changes.

Better Security. Automation in retail can also improve security measures within retail environments. Automated surveillance systems, smart locks, RFID technology, and digital payment methods reduce the risk of theft and fraud. According to studies, retail theft has increased by 94% in the last five years. Not only can this lead to financial losses, but it will also impact employee morale, safety, and customer loyalty. Implementing automated security measures can significantly reduce these kinds of losses.

Besides retailers and individual businesses, retail automation also offers numerous benefits to customers. This makes it such a crucial development in the retail landscape. Automated retailing solutions enhance the overall shopping experience in several key ways, which can contribute to customer loyalty and satisfaction among brands and retailers.

Here’s how retail automation can impact customers:

1. Faster Checkout Process - Automated checkout systems, such as self-checkout kiosks and mobile payment options, significantly reduce wait times at the register. Customers can quickly scan and pay for their items without the need for cashier assistance or manual checkout.
2. 24/7 Availability - Automation enables round-the-clock service through online shopping platforms, automated customer service chatbots, and unmanned stores. Customers can shop, get support, and make inquiries at any time without being limited by store hours
3. Personalized Shopping Experience - Automation allows retailers to collect and analyze customer data to deliver personalized recommendations and offers. Customers receive tailored product suggestions based on their purchase history, preferences, and browsing behavior, enhancing their shopping experience.
4. Improved Inventory Management - Automated inventory systems ensure that popular products are always in stock, reducing the likelihood of customers encountering out-of-stock items. These systems use real-time data to manage inventory levels and predict demand accurately.
5. Enhanced Customer Support - Retail automation improves customer support through AI-powered chatbots and virtual assistants that can handle inquiries and resolve issues promptly. These systems provide instant responses to common questions, reducing the need for customers to wait for human assistance.
6. Seamless Omnichannel Experience - Automation in retail also enables the seamless integration of online and offline shopping channels. This provides customers with a consistent and convenient shopping experience across multiple platforms. Customers can browse products online, check availability, pick up in-store, or return items purchased online at a physical location.
7. Efficient Returns and Exchanges - Automated returns and exchange processes simplify and speed up these transactions for customers. Self-service kiosks and online return portals allow customers to process returns quickly and conveniently.
8. Greater Product Information - Automation provides customers with detailed product information through digital displays, digital shelf labels, mobile apps, and interactive kiosks. These tools offer specifications, reviews, and comparisons, helping customers make informed purchasing decisions.

With technological development nowadays, retailers have access to a wide range of automation tools and technologies that can streamline operations, enhance customer experiences, and improve overall efficiency.

Here are some examples of retail automation that retailers can implement:

• Self-checkout systems - Self-checkout kiosks allow customers to scan and pay for items without the need for a cashier. These systems are widely used in grocery stores, supermarkets, and retail chains. They reduce wait times, improve customer satisfaction, and lower labor costs.
• Automated inventory management - Automated inventory systems use software to track stock levels in real-time, reorder products automatically, and manage warehouse operations. Big retailers use advanced inventory management systems to optimize stock levels, minimize stockouts and overstocking, reduce human error, and enhance supply chain efficiency.
• AI-powered chatbots - Retailers use AI-powered chatbots to handle customer inquiries, provide product recommendations, and assist with order tracking. Most of them are also able to provide 24/7 customer support, improve response times, and enhance the overall shopping experience.
• Automated payment systems - Contactless payment solutions enable quick and secure transactions. Most established retailers offer mobile payment options to streamline the checkout process, enhance transaction security, and improve customer convenience.
• In-store Robotics - Retail robots and grocery robots assist customers in finding products, answering questions, and monitoring inventory. These robots enhance the in-store shopping experience by providing helpful information and store navigation assistance.
• Virtual fitting rooms - Virtual fitting rooms use augmented reality (AR) to allow customers to "try on" clothes and accessories online or in-store. This kind of retail automation reduces return rates, enhances the online shopping experience, and drives customer engagement.
• Automated checkout stores - Automated or autonomous checkout stores allow customers to pick up items and leave the store without waiting in line or checking out. These cashierless stores have sensors and cameras that track what customers take, and charge them automatically via an app.
• Automated returns processing - Retailers use automated returns management systems to handle returns efficiently, whether online or in-store. Big companies usually offer hassle-free automated returns processes, including prepaid return labels and easy refunds for customers. This improves customer satisfaction and reduces operational costs.
• Smart shelves - Smart shelves equipped with sensors or RFID technology can detect when products are low or misplaced, and automatically notify staff. Retailers like big box stores and supermarkets are experimenting with smart shelves to improve store management and the in-store shopping experience. 
• Digital shelf labels - Digital shelf labels, or electronic shelf labels (ESL), replace the traditional paper labels in retail stores. They’re usually controlled on a single platform and can be used to streamline various retail operations because of their various features.

While retail automation is helpful, it’s not a surprise that retailers will have a hard time choosing which solutions to implement in their own stores. Fortunately, digital shelf labels are a great starting point for retail automation. If you’re a retailer and you’re still a bit hesitant when it comes to investing in retail automation, digital shelf labels, particularly Newton ESL, have all the advantages you need as a small business or a big retail brand.

Here are the key benefits:

• Real-time updates and dynamic pricing - Newton ESL enables real-time price adjustments to reflect promotions, demand, or competitive pricing, which enhances revenue management.
• Cost efficiency - Newton labels reduce labor costs associated with manually changing paper labels, freeing staff for more value-added tasks.
• Price and product information accuracy - Newton ESL minimizes pricing and information errors. This ensures that shelf prices match the prices at the register, improving customer trust and satisfaction. This also ensures that customers make informed purchase decisions, as Newton labels have a 7-page information capacity to display product information and more details.
• Time savings - Newton digital shelf labels streamline the price updating process, promotion highlights, and more on a central platform. This allows for immediate changes across all store locations.
• Improved inventory management - Newton labels can be integrated with inventory management systems to display stock levels, promotional offers, and product information directly on the shelf.
• Enhanced customer experience - With various robust features like breakneck update speed, 7-page information capacity, functional buttons, 7-LED indicators, and NFC retail technology, Newton digital shelf labels can improve the shopping experience of customers.
• Sustainability - These digital labels reduce the negative environmental impact of traditional price tags, including paper waste. This supports sustainability initiatives within the retail industry.
• Promotional flexibility - Digital shelf labels help retailers with quick implementation of sales and promotions, responding swiftly to market conditions and consumer behavior.
• Competitive edge - Newton labels show technological advancement and commitment to innovation, which attracts tech-savvy customers and differentiates retailers from competitors.
• Visual merchandising and store layout - Digital shelf labels like Newton ESL also contribute to visual merchandising and retail store layout as they provide a modern and engaging environment for retail stores.

Overall, digital shelf labels such as SOLUM’s Newton are retail automation that’s innovative, user-friendly, and engaging for both customers and retailers.

If you’re looking forward to embracing automation in retail, you can start with digital shelf labels now! Talk to SOLUM experts and know how to take advantage of Newton labels as a retail automation.

References

• https://www.podium.com/article/retail-automation-solutions/
• https://www.ciklum.com/resources/blog/how-the-use-of-automation-is-leveling-up-the-retail-industry 
• https://chrisbateson80.medium.com/retail-automation-benefits-and-examples-b9856d5d916f 
• https://www.solumesl.com/en/solution/newton 

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