Published on the 01/03/2017 | Written by Anthony Caruana

With retailers facing increasing labour costs, tighter margins and more demanding customers, the right technology can be the difference between failure and success…

The world of retail has seen massive changes over recent years. The era of walking into a store, chatting to a sales associate and making a purchase is closing. Today, customers carry out online research, entering shops armed with more knowledge and information than ever before and are better informed than many sales associates.

Online purchasing has resulted in distribution centres having to change the way they pick orders from warehouse bins. Instead of workers picking many items to fulfil orders, shoppers are buying single items, resulting in higher labour costs in warehouses.

A recent survey of retailers, carried out by JDA Software, looked at the customer and retailer challenges facing this transforming market.

Patrick Viney, APAC VP retail industry strategy at the company, said the survey focuses on profitability, costs and the customer proposition.

“As we’ve moved from multi-channel, to omni-channel and now to digital transformation, that’s impacting profitability in a number of ways,” he noted.

Margins are being eroded as customers expect more fulfilment options from stores. For example, the increasingly popular ‘Click and Collect’ options mean the number of staff needed in some stores, and the work they do, is changing. And items might ship directly from a warehouse to a customer, or be shipped from a store.

Transactions that were previously low-touch are changing. Viney said in the past, customers would enter a store, browse, choose and move to the checkout to complete the transaction. Customers now ask more questions requiring more time from sales associates and have shopped around for the best price before entering the store.

“In order to compete, a lot of retailers are having to offer more options. They’re having to think about the omni-channel strategy and think about how they minimise that labour and cost impact,” he said.

In order to overcome these challenges, Viney said automation, robotics and better systems integration is key. For example, he pointed to the potential offered by RFID tags.

Although these have been around for some time, they are becoming a viable option for more retailers as prices fall.

Intel’s retail sensor platform allows retailers to track items within a store. Viney said this would allow workers to locate a garment left in a change room by a previous shopper – something that could be the difference between closing or losing a sale.

And that system could be integrated with a task management system that would direct sales associates to find items that are in short supply or that have been moved from their correct location so they can be made available to customers.

RFID does have some challenges. Viney noted there are still a number of vendor-specific standards in the market with Motorola, NCR and others delivering proprietary solutions to the market. But he expects some common standards to emerge so retailers won’t be locked into single vendors.

The cost of tags is also an issue. But some retailers, such as Zara, are no longer tagging specific garments in their stores. Instead, they are putting the RFID tags on security tags. When the security tag is removed at the point of sale, it can be recycled. This means RFID tags can be used on relatively low cost items – something that the ROI didn’t previously support.

As well as the integration of systems, Viney said robots are also being deployed. US retailer Lowes is using robots in stores to help customers find goods.

“The robots are deployed and interact with the customer, take them to the location. What we are seeing is a lot of automation and IoT devices connecting back to traditional retail store solutions. Category management and floor-planning now become the template which they can access to get location from. Inventory visibility systems allow you know where the inventory is.”

Meanwhile, Amazon Go stores are fully automated with a combination of AI and robotics allowing customers to shop without the intervention of a sales associate at all.

The data and analytics that underpin the retailer of the future will mean customer demand will be accurately forecast. Stores will know when customers are more likely to arrive so they can manage staff appropriately. Stock levels will be optimised and sales associates will know exactly where every item is located – even if it is misplaced. In-store mobile devices will deliver this information to workers and allow them to either allow the items to be taken home by the customer or shipped to them.

While many of the pieces to this perfect retail puzzle are available today, Viney said the next step is to integrate them for a seamless experience. And Viney believes this is not far away.