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Retail’s Cost Dilemma – Replacing All That Free Customer Labor

by Robert Hetu  |  January 11, 2018  |  Submit a Comment

If you don’t think robotic process automation (RPA) and intelligent automation services (IAS) are going to impact retail labor consider this, as digital commerce grows so does the need to replace all that free labor and transportation. The new customer experience paradigm moves hours of customer time spent gathering products, and transporting them home, from the customer to the retailer. Making the labor quotient even more out of balance for retail.  In a recent article Amazon stated “In the same time as we’ve deployed 100,000 robots, we’ve actually hired 315,000 people”.   The bigger question however is how many jobs the 100,000 robots replaced?  Would they have required 200,000 more people?  Amazon is of course starting from a different place than traditional multichannel retailers, who are seeking to utilize stores as fulfillment centers to enable unified retail commerce.

According to a study by the Time Use Institute, the average shopping trip takes 41 minutes. If you multiply that by the 1.5-trip per week average, that’s over 53 hours per year a customer is spending in the grocery store.  Extrapolating that out by an average of say 25,000 shoppers per week, over one year, equates to more than 68 million hours of labor.  At $10/hour that is $680 million.  Assuming just 5% of customers move from in store shopping to click and collect, there is a labor transfer of $34 million.  Granted that with great application support and exceptional processes the average time it takes an associate to pick an order is probably much shorter, so maybe we cut it in half, that’s still $17 million in additional labor costs for the retailer.  One must remember that the other 95% of customers are shopping the old fashioned way, so all of the existing processes must be maintained.

Gartner is predicting that through 2022, at least two large multichannel retailers will replace 10% of store associates with nonhuman resources.  Much of this will be through the removal of traditional checkout process.  For example Walmart is aggressively expanding is scan and go options. We expect to see many applications of robotic process automation to flourish, targeting inventory on shelf availability and planogram compliance, as well as in areas such as customer click and collect order distribution.

shopping carts

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Category: ai  technology-and-emerging-trends  

Tags: ai  algorithmic-retailing  artificial-intelligence  ias  retail  robots  rpa  unified-retail-commerce  

Robert Hetu
VP, Analyst Retail
7 years at Gartner
29 years IT Industry

Bob Hetu is a Research Director with the Gartner Retail Industry Services team. His responsibilities involve tracking the technology markets and trends impacting the broad-based retail merchandising and planning areas. Mr. Hetu is an expert in the areas of brand, vendor and assortment management, merchandise planning, allocation, and replenishment. Read Full Bio

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