By Ritukar Vijay, CEO at Ottonomy
Retailers are feeling the heat from rising labor costs, and are increasingly looking to automated solutions to keep worker costs down.
According to a February 28, 2022 story in The Wall Street Journal, US retailers spent 4 percent more cash on labor costs in the fourth quarter of 2021, compared to the same period in 2020.
Big box brands like Target, Costco, and Walmart are all raising wages above beyond the $15 minimum wage level to secure the staffing they need to stay competitive. For retailers, restaurants, and other consumer-facing businesses, the wage growth issue stems from a burgeoning problem – not enough workers.
An ongoing labor shortage is thinning out the ranks of potential employees (an estimated excess 10.9 million jobs are going unfilled, as of February, 2022).
That forces retailers to significantly boost wages, which can cut into bottom line revenues.
An opportunity for ‘last mile’ delivery robots
Enter the robots, which retailers and restaurants are leveraging to curb labor costs and keep revenue pipelines flowing.
According to a recent survey from RetailWire, approximately 25 percent of retailers already have robotics solutions up and running in in their places of business. Almost half say they “will be involved” with robotics during the next 18 months.
One area of burgeoning growth is in delivery robotics, especially in the burgeoning business-to-consumer (B2C) market.
According to Fact.MR, a market research firm, the global autonomous last mile delivery market will grow by an annual rate of 19 percent through 2031. Demand and technology advancements are the twin engines driving automated delivery growth.
“In recent years, there has been a fast increase in demand for autonomous last mile deliveries,” Fact.MR reports. “The market has seen significant expansion in recent years due to developments in delivery system technology. The market’s expansion can be linked to the growing use of autonomous vehicles to deliver goods without the need for human intervention.”
“Furthermore, the growth of the e-Commerce business has resulted in improved delivery methods, resulting in better and more efficient product delivery, which is fueling demand for autonomous last mile delivery.”
Areas of growth in automated delivery
The B2C robotic delivery market has experienced a great deal of growth in the past few years, which has fueled usage among retail and restaurant outfits. Pickup and delivery options have resonated with the public, too, with automated deliveries averaging about $5.3 billion in revenues each month.
These automated delivery tools are seeing the highest levels of growth.
Curbside pickup. The curbside pickup market accounts for almost one-third of automated delivery options. Companies like Walmart and Albertsons have deployed robotic pickup kiosks for their customers.
The process is easy and efficient for customers – all they have to do is drive up to the kiosk centers, tap in a code, and the robot shows up with their order within a period of a few minutes.
That scenario is tailor-made for retailers, who can avoid having to pay human workers to navigate through parking lots in severe weather to deliver products to customers, leaving more time for those workers to pack orders and attend to customer needs.
Additionally, automated curbside pickup has a big advantage over robot-based last mile delivery – time. Due to regulatory mandates across the US, last mile delivery automation will take two years or more to meet government operating standards.
There are no such mandates and limits for curbside pickup, which can be scaled up right away.
Easier and more accurate collection of data: With an overall increase in the number of retail industry B2C deliveries, companies like McDonalds are turning to advanced data collection and analysis to get a stronger grip on delivery performance.
With automated delivery, data is accumulated efficiently, thus enabling retailers to measure, analyze, and pinpoint areas where deliveries can be improved.
Additionally, robot delivery technologies give companies the data tools to improve other areas of the customer experience, like customer service, company branding, and inventory product acquisition.
A massive deployment of B2B robots: As consumer delivery automation shifts from business-to-business mode, retailers have made a huge investment in robots, at 150,000 strong – all of them focused on fast, safe and efficient automated consumer delivery.
Online purchases picked up at the retail location: Shoppers are increasingly comfortable with ordering products online, then going to the physical retail location for product pick-up – without engaging with an employee a single time.
Retailers are using robotics-powered parcel systems to order, store and deliver to customers at the store, whenever that customer wants to pick the goods up.
Retailers like Zara use robotics to “optionize” the consumer order-and-pick-up experience, enabling shoppers to pick up products at the store in just a few minutes, intuitively and seamlessly, for both in-store team members and for customers.
Normalizing the customer delivery experience: The retail automation experience isn’t fully complete until the customer shops and pays for an item with no human interaction.
That’s where customer-centric robotics are changing the retail game.
With robots able to order, pay for and collect for products with no human assistance, that circle is closed. For example, retailers like Walmart are finding that customers love the ability to collect their food, drinks and dry goods by using a console-based order code, and then have a robot pick up their groceries and deliver them to the customer at store “pickup towers” .
When “easy”, “fun” and “effective” are the terms shoppers use to describe your store’s shopping experience, you know your robotics investment is really paying off – and that’s exactly what’s happening with fully-automated customer-facing robots on the job right now.
Not turning back
Retail delivery robots have arrived, and they’re here to stay.
Industry decision-makers see how the retail industry has evolved over the past years and how customer-centric robotics are building brands, making money, and vastly improving the customer shopping experience. No question, they like what they see (as do customers).
What’s really impressive? The retail robotics delivery revolution is just getting started.
About the author: Ritukar Vijay is the founder and CEO of Ottonomy, a provider of autonomous delivery robots.