The retail and wholesale sector has arguably seen the greatest level of disruption as a result of the ongoing pandemic with the trend towards online shopping, which was already gathering pace pre-pandemic, being massively accelerated. The scope of this change is much wider than the ability to provide a frictionless online experience and extends to how goods and products are stored and distributed, how customer service support is provided 24×7 and how the in-store experience is harmonised with the online customer journey.
There are profit challenges offering omni-channel services when margins are thin even for traditional in store channels and increased pressure on retailers from market disruptors offering new retail experience e.g., till-less shopping and same day delivery. Businesses in the retail and wholesale sector need to implement operational efficiencies driven by artificial intelligence technology to improve profitability and service to customers and by making better use of data to drive improved customer insight.
The effect of the pandemic on non-essential retailers who did not have an online offering has been catastrophic and those without a high level of automation to rapidly and efficiently keep up with consumers expectations of rapid delivery of consumer goods have also struggled.
Intelligent warehouse automation
The COVID-19 pandemic has driven a massive shift in consumers’ priorities globally and retail and wholesale organisations have had to swiftly pivot their business models and operational methods in response. Not only have retailers had to adjust to their customers’ fast-changing goods and service requirements with, customers having to follow government social distancing measures and the forced temporary closure of some retail sectors, they have also had to adapt to a surge in demand for online services and an equal decline in footfall in their physical stores.
As a result, many retailers are in the process of implementing warehouse automation solutions utilising sophisticated robots controlled by an air traffic control system over wireless technology to automatically pick goods for packing and shipping for consumer or store delivery. Gartner’s 2021 CIO survey shows 35% of global retailers reported they were planning to increase spend on AI technologies in 2021. Going forward, retailers will need to leverage AI technologies that create efficiencies to keep up with consumers’ demand.
Re-inventing the in-store experience
As retailers begin welcoming consumers back to their physical locations, they are now faced with the challenge of how the provide the same frictionless service that their customers have become used to when transacting online. As an example the online retail giant, Amazon, has just opened its first UK ‘Groccery Fresh’ store in London which allows customers to identify themselves as they enter the store through their smartphone app and then pick products and fresh produce. The technology involves hundreds of cameras and depth-sensors and software that tracks the shoppers and allows the customer to simply walk out of the store, with the goods being automatically billed when they leave.
The store also has a collection point for online orders and the facility for customers return goods without having to repackage or re-label them, and it is this frictionless service model that could prove to be a major disruptor for retailers who fail to invest in re-imagining the in-store experience.
The omni- channel marketplace
Today’s consumer expects to be able to use several mediums to interact with a retailer and make a purchase decision – be it browse in-store or online, make a “click and collect” order to pick up at their convenience or have their weekly shop delivered to their home. All this needs to happen seamlessly, with any breaks in the chain or inability to interact with a retailer subject to immediate criticism via social media channels or emails. In April 2019, just under £1 in every £5 spent in UK shops was spent online, according to the Office for National Statistics (ONS). By November 2020, 36.2 per cent of retail sales happened online.
With online sales continuing to soar, the fast pace of technology change within the industry has caught out some of the established supermarket retailers, with many needing to rapidly rethink their business models to keep up. Events such as Black Friday and Cyber Monday have become commonplace in the UK retail market, putting added pressure on fulfilment infrastructures to deliver a seamless multi-channel experience, even during these times of high demand and peaks in online shopping.
This potential shift in model could have disastrous results for those businesses who do not have the technology infrastructure or management processes in place to deal with the change. Some retailers also face challenges of integrating their store and e-commerce channels. It is a major undertaking to remodel the entire company IT infrastructure to accommodate the online business, and many settle for “bolt-ons” utilising disparate data from different systems to track refunds, returns and lost items. This can result in disconnects between data held in inventory, logistics, customer accounts and finance systems with consequential impacts on customer service.
Peru has worked with a wide range of retail and wholesale businesses and we understand the particular challenges this sector faces. Over the years we’ve helped our retail and wholesale clients deliver technology transformation programmes, become more intelligent buyers of IT services and re-evaluate their digital architecture capabilities.
We have developed a best practice data framework toolkit which helps organisations understand where data resides and define how it can be used to support key challenges such as delivering personalised customer service and improving fulfilment processes and we have helped wholesalers on their warehouse automation journey evaluating and selecting automation technology partners. Book a meeting to talk through how we can help your organisation.