Laying the Operational Foundation for Autonomous Stores
Autonomous stores and retail innovation are fascinating topics. The infrastructure and operational efforts that enable them aren’t often given the same broad attention. But industry insiders know that strong internal operations and infrastructure for the deployment of new technologies differentiate the companies that thrive in today’s rapidly changing retail environment.
According to Deloitte, technological preparedness is one of the deciding factors for companies that fare well through tumultuous economic periods, such as the Covid-19 pandemic. But the value of laying a robust foundation for technological adoption extends beyond times of crisis. Companies must excel and stay ahead of the curve in today’s technologically competitive environment.
Preparing internal operations for smart stores
The importance of operational preparedness is especially true for grocers implementing emerging technologies such as autonomous checkout, also referred to as seamless checkout. Grocery retail is rooted in a traditional, brick-and-mortar business model, with many long-standing and comprehensive internal processes. These operations may struggle to adapt to the unique needs of automated checkout systems and smart stores.
One of the biggest operational changes that grocery retailers will face is employee training and role reassignment. With the adoption of autonomous store technologies employees will shift into customer service and technical roles. Grocery retailers must create specialized training programs for new roles and responsibilities. Developing such programs can take several months, depending on the size and resources of the retailer’s learning and development teams.
McKinsey’s article “Transforming Operations Management for a Digital World,” discusses a bank’s investment in digitization and the operational changes required to succeed. They explained that “building the portal wasn’t enough, nor was training branch associates to show customers how to use it. The whole bank needed to reorient its activities to showcase and sustain digital. That meant modifying roles for everyone from tellers to investment advisers, with new communications to anticipate people’s concerns during the transition and explain how customer service was evolving.”
Similar to the grocery retail industry, banking is a traditional industry rooted in brick-and-mortar practices. Both banking and traditional retail are being disrupted by digital native services, from online banking and neo-banks to online grocery delivery and meal kit subscription programs. Both must adopt cutting-edge technologies that automate and digitize their services to evolve–and survive–in their business category. Grocery retailers are realizing that implementing frictionless checkout tech is not a one-and-done process. Operational adjustments to the workforce, training programs, and internal processes are needed to set up for success.
So how can leaders turn these insights into action?
The first step is to establish an internal task force comprised of tech, business, finance, and ops representatives. The task force should be given the resources and authority to determine the measures necessary for the implementation of automated checkout systems. The task force should then explore different technologies, providers, and partners, as well as look at similar businesses to see which steps they took and how they chose to innovate. Following this stage, the task force must come together internally and draft recommendations based on their expertise and findings. This will include proposing changes and recommending budgets and timelines that will prepare the organization to move forward with autonomous retail.
Infrastructure changes are inevitable – and are already happening
Flexible infrastructure is an innovation enabler. Certain technology vendors know how to transform even stores with the most outdated infrastructure, but it is important to set expectations straight – the more flexible the infrastructure, the smoother the transition will be. It is similar to upgrading your smartphone. At some point, even though your old phone still works, you may realize you need more battery life and processing power to support more and more sophisticated apps.
Traditional grocery stores are still highly operational and many customers are attached to the traditional grocery experience. But when other players are updating their stores left and right, and offering superior and more diverse shopper experiences, a traditional store may become outdated, quickly.
Retailers who act now to put in place the infrastructure that supports technology that can turns their existing stores into smart ones will have the upper hand and keep their stores up to date.
This transformation is already familiar to most retailers from other parts of the supply chain. For example, grocery retailers have made infrastructure changes in their warehouses and micro fulfillment centers by upgrading network connectivity in these facilities. This change is necessary to provide the real-time data that powers the robots and automation tools that are central to retailers’ inventory management.
The frictionless checkout experience delivered by autonomous grocery store can be perceived by customers as magical, and the technology behind it is groundbreaking, but like any other technological innovation, it requires very tangible infrastructure in place so it can work its magic.
The learning curve in future-proofing your business
The process of implementing autonomous stores is similar to preparing for and running a marathon. There are many parallels between the two. You need to prepare both physically and mentally to run the full 42.195 km. Similarly, the successful deployment of frictionless checkout in stores requires both physical adaptations and a mindset shift within the organization. Expect it to be a learning curve. Each retailer’s unique brand personality also brings a new set of challenges for the technology, such as different product lines, use cases, and shopper behaviors and expectations. Some retailers have come to realize that they must begin preparing the ground for frictionless checkout tech even before they open their first store.
This learning process is a critical part of successful implementation and scale. Some retailers choose a more passive approach, opting to wait and see how other players implement emerging technologies, hoping to learn from their successes and mistakes. They are running the risk of staying far behind their competition. But more than that, they are running the risk of learning the wrong lessons. Each organization is unique, with its own needs and expectations. One retailer can attempt to mimic the actions of another, with a completely different outcome. Such a retailer will skip over golden opportunities to learn hands-on processes that best suit the organization. Laying the foundation for the first store can take time, but each subsequent store will see this timeframe narrow. The goal of operational preparation processes is to set retailers up for roll out at scale, and across diverse markets, store sizes, and formats.
Autonomous storeis no longer just a theory or trend – since inception in 2018, dozens of stores have been deployed around the world, with a vast majority in the past year alone. As part of the next step in the evolution of grocery retail, grocers need to begin laying the foundation for frictionless checkout tech, but also for a completely digitized StoreOS®, where the benefits go way beyond seamless checkout. With the right operations and infrastructure systems, retailers will be able to leverage the vast capabilities derived from the computer vision and AI that power frictionless checkout, which produces rich data and insights that enable these additional tools. From inventory management to planogram optimization, retailers will be able to centralize all of their in-store operations, as well as improve ROI with solutions for proximity marketing and shrink reduction.
This organizational transformation will be viable for decades to come as new technologies are invented. Many of these innovations we can’t even imagine today, just as frictionless checkout tech and a fully digitized StoreOS® would have sounded completely fictitious merely a decade ago. This is why it is so important for retailers to begin future-proofing their business today.
The innovation marathon requires significant preparation, dedication, time, and investment, but there are few things more satisfying than crossing the finish line ahead of your competition.