Retail Automation: Big Bang Or Slow Build?

Kiosks. Intelligent cabinets. Cashless stores. Retailers must embrace automation, as Tim Moran, senior vice president of product and marketing at Worldnet, tells PYMNTS. But certain verticals need finesse rather than a “big bang” approach to automating the customer journey – and maybe a hybrid model that blends the online and brick-and-mortar experiences.

Where once there was cash at the register, there will be scan and go. The salespeople dotting the aisles may give way to self-service kiosks.

In an interview with PYMNTS, Tim Moran, senior vice president of product and marketing at Worldnet, told PYMNTS that the age of automated retail is dawning — but there is no one-size-fits-all approach.

Automation efforts in retail, he said, can be split into two camps — one focused on the front end, or consumer experience, and the other on the back end, which ties into behind-the-scenes functions such as inventory management.

“There are benefits to both sides of the equation that can come through automation,” Moran said, adding that “if you’ve automated the consumer, you’re offering them self-service capabilities, delivering a better kind of experience.”

Automating interactions with consumers, of course, translates into fewer staff needed at, say, call centers or onsite in a brick-and-mortar setting, trimming retailers’ operating costs. Streamlining the back end to keep track of what needs to be shipped and when reduces overhead.

Moran said the overall trend toward automation is being driven by the consumer, and in particular, by millennial consumers.

He noted that millennials have “grown up with the online world on their smartphones.” Walking into a physical retail experience can in fact be jarring, replete with staff on site, and cash registers and tendering cash or cards (or tapping to pay) at the point of sale.

The tech savvy consumer, he told PYMNTS, expects choice and autonomy in a retail setting.

“This is really where retailers ought to focus their efforts,” he said of automated processes. “They should focus on using automation and using analytics and predictive technologies to provide the kind of experience now that consumers are expecting — a self-service capability in the retail store.”

Ah, but retailers deal with a wide demographic range. They must cater to varying degrees of comfort with technologies and the desire, for example, for baby boomers to interact with sales associates amid the aisles.

It’s a tricky task for retailers to avoid alienating would-be customers, and that’s especially true of efforts to embrace automation. Moran said companies can take a page from firms such as McDonald’s and CVS, which offer what he termed “parallel” experiences, where automation and traditional retail interactions co-exist and where intelligent cabinets have gained traction.

“It’s important that retailers be able to support both models in parallel,” he said, “and that there's not a big-bang switch over.” Customers also want unobtrusive technology, he said, as evidenced by cashierless store models such as Amazon Go, where customers pick up items, scan them with QR codes and accounts are debited.

The overall trend, he predicted, is that eventually the self-service model will become a standard one across most — but not all — retailers.

Some Exceptions to Automation

As for settings where a completely automated experience is less likely to find success on the customer-facing side of operations, he said, “the jury is still out on automation for very high-end or luxury goods. If you look at high-end fashion or high-end restaurants, these retailers tend to be associated with very high levels of service and the price of the goods is also tied to the service.”

That being said, higher-end vendors can find benefits with automating data-focused functions, where analytics can shed light on what people are buying, where to stock items and perhaps predict what people want (in turn reducing costs on the back end through better inventory management).

One other sector that requires a tailored approach to automation, he said, can be found in grocery delivery. The space is a crowded one, and getting even more densely populated, with Amazon, Walmart and local grocers all offering online ordering and home delivery. For smaller operators, remarked Moran, to move online means incurring a significant level of additional costs, spanning delivery vehicles and order management systems. There also remains the perennial challenge of maintaining product quality, say, for produce.

“You hope that the customer at the end of the day is willing to pay a price premium which was going to cover those costs, but that's not necessarily always the case,” he said.

The Hybrid Model

In groceries, he said, there always will be a subset of people who want to choose items like perishables in a tactile environment, so there is likely to be a continued evolution toward a “blended online and brick-and-mortar experience, which can alleviate concerns about product quality and freshness.”

The blended experience carries challenges, especially on the back end. As he said of Worldnet, “We see a lot of customers who are dealing with multiple different payments providers — one provider online, a different one for mobile checkout and a different one again for the in-store experience. What that means at your back end is that you've got a whole lot of different data stores. It becomes very hard to identify what individual customers are doing across those channels.”

He said it is important for retailers to consolidate back-end providers in order to get a holistic view of their customers.

“It's early days really,” he said of the trend toward automated retail. For the consumer, he added, “there is an online world and a brick-and-mortar world.” Deliveries, in-store kiosks, intelligent cabinets and even Amazon Go all represent part of an evolution, as he told PYMNTS.

“We’re going through a rapid phase of experimentation within different verticals to see how they can satisfy consumer expectations,” he said.




The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.