How Robotics and AI are Changing Retail

From robots in the aisle to customer service bots and simulation modeling across the supply chain, a new “Industrial Revolution” is upon us. Are you ready to embrace this robotic culture?

A CSD Staff Report

The convenience store industry continues to evolve and where it ends up as robotics and personalized delivery gain traction is anyone’s guess.

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With the likes of Bill Gates and Elon Musk talking about the potential of artificial intelligence (AI) to change the world for better or for worse, the fourth industrial revolution is coming and cognitive automation is its flag bearer, according to a report by KPMG.

You may think that this is not relevant to retail or certainly not for the next 10 years. Well, think again! Technologies that can think, learn and adapt will increasingly be part of our lives and sooner rather than later, according to KPMG’s report “Robocalypse: Now? What the ‘Fourth industrial revolution’ means for retail.”

This AI and robotic technology can also transform retail by streamlining labor, improving customer service, upselling new items and yielding a treasure trove of data that helps you sell more, both to new and existing customers.

Big-name retailers such as Walmart and Giant Food Stores have been working toward employing robots to reduce costs and improve customer service.

Amazon has already opened six Amazon Go locations—three in Seattle, one in Chicago and two in San Francisco—where customers scan an app to enter, select items and leave without checking out. Ceiling cameras monitor the selection process and customers’ credit cards are automatically billed. Amazon plans 3,000 of such locations by 2021.

BEYOND RETAIL
Vendors are responding by offering a range of technologies, including intelligent robots that work alongside humans to find and retrieve stored items, high-speed packing and sorting machines that shorten the time it takes to process inbound and outbound loads, and software programs that provide complete visibility and tracking of shipments and products held in storage.

McLane’s Ozark distribution center features cutting-edge robotics and artificial intelligence and is changing the way products are brought to market. This is such an important issue that the Young Executives Organization (YEO) has partnered with McLane, who will host the 6th annual YEO Conference at its Springfield, Mo. facility. YEO members will get a firsthand tour of the distribution center and learn how robotics and AI are transforming how products are brought to market.

The 370,000-square-foot McLane Ozark Distribution Center distributes groceries and merchandise to retailers in Missouri and Kansas and parts of Arkansas, Nebraska and Oklahoma. The facility also incorporates other technologies, such as wrist-held scanners to identify products and machines that automatically take apart inbound pallets or put stretch wrap around outbound loads.

As a result, workers at the automated warehouse are 20-25% more productive than workers in McLane’s other distribution centers. The facility also scores better in terms of safety and order accuracy. A second automated warehouse opened in Findlay, Ohio in 2017, and some facilities may be retrofitted to accommodate automated features in the future.

ANTICIPATING CHANGE
Robotics are set to revolutionize retail, and not in some distant future scenario, but within the next 10 years. Not only will robots begin to handle more physical tasks, but they’ll also begin to manage more cognitive tasks by learning algorithms that allow them to make decisions on our behalf.

Paul Martin, head of retail, UK KPMG and the lead author of the “Robocalypse: Now?” report, was a guest speaker at the 2018 National Advisory Group (NAG) conference in Florida. He said a San Francisco-based pilot by Target used an inventory-control robot called Tally, built by Simbe Robotics, to browse aisles and scan 20,000 to 30,000 SKUs per hour, focused on taking inventory.

Tally did in one hour what humans could do in four.

Meanwhile, Amelia, an advanced chatbot that is considered the most human AI, was created by IPSoft and is used by a variety of institutions. ‘She’ can answer calls and handle simple requests, such as for an address or store hours. Most importantly, she knows when to bring in a human to respond to more complicated inquires. In one study, Martin told NAG attendees, she cut down 80% of the calls that wasted employee time.

Of Amelia, Forbes magazine wrote, she will inevitably cause “mass disruptions that will require workforce retraining.” Those are strong words that should have garnered retail attention.

PREPARING FOR CHANGE
According to KPMG, the pace of change is fast and multiple consumer demands mean you’re likely to be stretched several ways at once. That’s when data and fact-based insights can be used to prioritize. When trends change so quickly, organizations have to be able to respond accordingly. The biggest challenge facing organizations will be creating alignment among senior leadership about what to do, why and how to fund these changes.

Agreeing on what you are setting out to achieve is only the first step. Setting a vision that is right for your organization about where you want to play and why will leave the not so small challenge of actual implementation. The key to integrating the right tech into your business model is a staggered approach. KPMG recommended a six-step strategy:
• Evaluate what is or will soon be available.
• Investigate what competitors and other industries are doing.
• Identify where AI is applicable in your business.
• Develop a strategy for adoption.
• ‘Experiment’ with high priority opportunities.
• Develop and implement a change management strategy.

There’s no doubt that the current technological revolution is a time of great innovation. But, for many, it may also paint a more worrying picture of the future where armies of unemployed drift from one menial task to the next. In the same way that the Industrial Revolution transformed society, so robotic technology has the potential to change the face of retail.

The bottom line, according to KPMG is that the robots are coming.

“It can sound like a frightening future, but it doesn’t need to be. Change for any organization is always challenging, but when the rewards are many and various, it makes no sense to stand still,” Martin said.