The impact of robotics on the retail and apparel sector
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The matrix below details the areas in robotics where retailers should focus their time and resources. We suggest that retailers invest in technologies shaded in green, explore the prospect of investing in technologies shaded in yellow, and ignore areas shaded in red.
Areas like semiconductors should be ignored by retailers as most companies do not produce their own and choose to partner with existing technology vendors. Logistics robots, industrial co-bots, and inspection, cleaning, and maintenance robots should receive the most investment from companies across the retail and apparel value chain.
Robotic intelligence and cloud robotics will be lucrative investment areas for several retail and apparel value chain segments. They should be explored in the future when further technological developments and robotic infrastructure investments have been made. Amazon is one of the leading retailers in this area as the robots developed by Kiva Systems, which it acquired in 2012, use the cloud to coordinate with each other and move around the warehouse.
Drone technology will be another area of disruption for retailers' traditional distribution and logistics models. Drones are filling gaps in delivery systems, including reaching isolated areas. Large players are already investing in this area. In 2021, Walmart established a commercial drone hub in partnership with DroneUp to test deliveries, having gained approval from the Federal Aviation Administration (FAA) for certified drone pilots to fly drones over moving vehicles and people.
Walmart has made several deliveries since then and plans to expand its DroneUp delivery network to 34 sites by the end of 2022. In August 2022, Amazon announced that it would soon start delivering goods via electric drones to customers in Lockeford, California. The company claims that it has developed a system that navigates drones safely around obstacles such as pets, people, and other aircraft without human visual observers supervising them.
In the next few years, several specialist service companies will emerge, offering cloud-based solutions for drones, such as surveying, monitoring, and delivery. Rather than having to develop drone capabilities in-house, organisations will be able to rent drone services on an as-needed basis. The most anticipated application for this drones as a service (DaaS) model is delivery services, stimulated by Amazon’s vision of a drone-powered delivery network.
How robotics helps resolve the challenge of Covid-19
Logistics robots became increasingly important as demand for online retail accelerated during the Covid-19 pandemic. According to GlobalData’s Retail Analytics, global online retail sales reached $2.4 trillion in 2020—an increase of 31.9% from 2019, as physical stores temporarily closed amid periods of lockdown, forcing consumers to switch online. These habits have stuck even as restrictions have eased due to the convenience of shopping online and lingering hygiene concerns about shopping in-store.
Autonomous deliveries were one of the methods deployed by retail companies to maintain social distancing during the pandemic. Investment in driverless vehicles and drones increased as lockdowns caused disruptions to logistics. Alibaba’s data shows that its autonomous delivery robots, Xiaomanlv, were used to deliver over 600,000 goods for residents in lockdown in Shanghai during April and May 2022.
Amazon’s Scout, an autonomous six-wheeled pilot delivery robot, was used in parts of the US to continue deliveries during the Covid-19 pandemic lockdowns. While Amazon has since discontinued Scout field testing, it claims that it has not abandoned the project altogether. Automated guided vehicles (AGVs), drones, and bikes will continue to play a key role in the future of delivery options post-pandemic.
How robotics helps resolve the challenge of digitalisation
Globally, physical retailers are struggling to maintain consumer engagement, particularly with the continued success of online retail. Retailers are using robotics within warehouses and in-store to address the disruption caused by greater digitalisation.
Fully automated stores can bring a wide breadth of benefits, for example, cutting in-store personnel costs and offering a more personalised experience. In-store robots can be used to assist customers with their shopping and monitor inventory. The data collected through robotic automation can be used to better address customer demand by managing product inventory more accurately.
Retailers have also been using robotics as part of their omnichannel offerings. For example, Zara partnered with Cleveron, a producer of robotics-based parcel terminals, to use robots for buy online, pick up instore (BOPIS) purchases. The parcel delivery robots can collect trays and handle up to 2,400 delivery packages for consumers simultaneously. This has helped reduce friction in shopping by increasing convenience and speed for shoppers.
How robotics helps resolve the challenge of ESG
Using robotics provides new opportunities to address the challenge of ESG in the retail industry. For example, using electric, driverless robots for delivery services can help improve companies' carbon footprint. Co-op’s partnership with Starship Technologies to roll out autonomous robot delivery in the UK is an example of this.
For many years academics and futurists have expressed concerns that automation, particularly when coupled with AI, will eventually eradicate human jobs. While automation is likely to reduce the level of labour required, it will create new jobs too. In the coming years, few jobs will have been fully displaced by technology, but a new class of jobs will have emerged: those required to manage and oversee the new automation technology.
The types of roles will change as humans move away from menial and repetitive jobs toward technology and computer science. Robotics can propel humans into new echelons of productivity, efficiency, and economic growth. Human labour will shift towards areas where the human touch is crucial, and workers will require reskilling and upskilling.
Retail brands could also use cleaning and maintenance robots to promote sustainability. Nike’s robot-powered system for footwear, the Bot Initiated Longevity Lab (BILL), is designed to extend the life of its sneakers. Nike explained that using robotics as part of recycling technology to give products a second life reduces its environmental impact on the planet. BILL is also part of Nike’s Move To Zero initiative.
How robotics helps resolve the challenge of supply chain disruption
Retailers are turning to digitalisation and automation to address supply chain challenges. The retail industry has long struggled with stock issues, both instore and in warehouses; autonomous robots can navigate shop floors and warehouses while surveying stock levels. Sophisticated robots can scan products and identify stock issues much faster than humans. By diminishing stock issues such as stock-outs, retailers can become far more efficient and cut costs.
Deal activity also shows that retailers are increasingly investing in robotics to address supply chain disruption. Walmart’s acquisition of grocery robotics company Alert Innovation in October 2022 was aimed at modernising its supply chain operations through greater automation in stores and distribution and fulfilment centres. Drones and logistics robots enhancing delivery also improve supply chain management and optimisation, especially given labour shortages in the retail sector.
GlobalData, the leading provider of industry intelligence, provided the underlying data, research, and analysis used to produce this article.
GlobalData’s Thematic Intelligence uses proprietary data, research, and analysis to provide a forward-looking perspective on the key themes that will shape the future of the world’s largest industries and the organisations within them.