As we emerge from a global pandemic, it’s hard to envision what the future of retail looks like. What’s not hard to imagine is that it will most certainly look different than it did before COVID-19. Stores are rapidly becoming part showroom/part distribution center (DC), and that’s creating a blurring of the lines between what was once traditional retail and an environment that looks more like a warehouse at times. On one hand, consumers who have had to do most of their shopping online are longing for experiential retail. On the other hand, few are eager to wrestle a case of water off a grocery store shelf and into their vehicles. As a result, stores are rapidly adopting workflows and technologies once reserved for the warehouse to meet new consumer demand.
With store associates spending just as much time picking and packing items for online shoppers as they do placing items on shelves for in-store customers, it is hard to distinguish between front-of-store and back-of-store workflows. Whereas inventory receiving, put away, returns, reshelving, and price management were always part of brick-and-mortar operations, picking, packing and quality control inspections were not – at least not to the extent they are today.
Picking Apart the In-Store Picking Conundrum
Before 2020, buy online, pickup in store (BOPIS), curbside pickup, and home delivery orders represented less than 2-3% of overall U.S. food and beverage sales as most of us were content to grab a cart and pull items off shelves ourselves. Well, nothing like a pandemic to change shopping habits, right? Now consumers are more than happy to have retailers pick those items for them, load everything up in their vehicles, and even drop them at their doorsteps. Some are even letting retailers through the front door so orders can be left on the kitchen countertop – it’s the ultimate home delivery experience (short of having a personal chef prepare dinner). As a result, e-commerce now accounts for north of 20% in grocery sales and is projected to reach 55% by the end of 2024. And the current online sales volume is even higher in other subcategories such as office supplies and electronics. According to McKinsey & Co., over 75% of us changed our shopping habits during the pandemic, and the “stickiness” of that change is high – meaning retailers need to adapt quickly or face losing customers.
But if you think about what goes into picking orders for today’s discerning customers compared to 18 months ago (when most customers using click-and-collect or door-drop options were just appreciative of the convenience), you’ll appreciate the effort that must go into perfectly executing this single action in the whole scheme of retail operations. Putting one “bad” bunch of bananas in a customer’s bag could degrade the entire e-commerce experience, costing you both customer loyalty and the few dollars you had to compensate them for giving them yellow bananas when they asked for green. And repetitive issues could hurt your brand reputation, which subsequently influences the loyalty of multiple customers who will hear about bad experiences from friends, family, neighbors, and social media networks. This is especially true in areas where there are multiple competitors within a few miles’ radius and shoppers have options. In other words, the growing responsibility to pick items for customers is a lot more disruptive than it seems. But critical online customers aren’t the only concern. In-store shoppers can just as easily be impacted by order pickers’ actions and a retailer’s overall e-commerce operations.
First, store staff aren’t typically trained on where items are within a store. On top of that, picking orders quickly to meet the promised two or four-hour readiness window often involves staff rushing about the store, which can cause friction with the customers who are shopping for themselves. Given that retailer loyalties have already been shattered at least once during the pandemic – with shoppers forced to try different retailers and brands to combat constantly empty shelves – the last thing retailers want to do in a post-COVID-19 world is aggravate customers shopping their store floors.
How do we mitigate that? By leveraging technologies that are well tested in a warehouse or DC environment in a “front of store” setting.
Where and How Retailers Can Put “Warehouse” Technology to Work in Stores to Improve the Customer Experience and Overall Operations
Though implementation in brick-and-mortar retail stores may be new, most of these technologies have actually been used at other supply chain touchpoints for some time now to help execute retail operations. Considering the overlap that now exists in warehouse and store-driven fulfillment models, most should prove to fit quite naturally into retailers’ current workflows and systems, even if some slight optimization will be needed during integration. For example:
- “Pick to Light” is a solution often used in a warehouse setting that can now be easily replicated in a store environment leveraging technology such as electronic shelf labels (ESL). ESLs have been on the market for decades, but widespread adoption has been elusive as it was hard to demonstrate the return on investment (ROI). However, many retailers are now revisiting them as an option given their multiple use cases. In picking, for example, think about a staff member clicking on the item to be picked on their mobile computer and that triggering the ESL to blink red (saying pick me!). The ESL enables that staff member to quickly locate the item and continue down their list. One can easily envision this being built into a retailer’s loyalty app, enabling a shopper to inquire as to where a certain product is and having the ESL blink direct them to that item. Picking efficiency and a great customer experience makes the ROI much more appealing.
- Heads-up displays – think smart glasses – paired with small finger-mounted ring scanners can dramatically impact the speed and accuracy of picking, enabling a worker to “see” the item they need to pick in their field of vision and quickly scan it as they place it in a cart or bin. Picking involves a lot of labor around grabbing items, sorting items etc., and the more “hands free” one can make the process, the faster the picking will progress – with an additional benefit being less wear and tear on the staff member. It’s a win-win from a labor perspective.
- Another fulfillment approach being trialed is the dark store, which is essentially the morphing of a live store into a DC of sorts. The store is closed to the public, and that enables pickers in the store to navigate the environment much faster given they don’t have to worry about running over customers. It also enables zone picking, meaning pickers can focus on one area with which they become more familiar. Perhaps one picker focuses only on dairy items in a grocery dark store, for example. They will know their area very well and thus be able to pick more efficiently. There are some logistical issues with dark stores, though. Given they aren’t shopped by customers, the setting negates the ability to mark products down for quick sale. And while curbside pickup may be offered, one loses the opportunity for upsell from shoppers entering the physical store. That said, this can still be a viable option, especially for underperforming stores with years left on their leases. I’ve spoken about micro fulfillment centers in a past post so won’t delve into that here. But that solution combines some of the features of a dark store with an experiential shopping experience.
- Augmented reality (AR) is another solution that has origins in the warehouse but can address many use cases in the store environment. An AR-enabled device can leverage the screen to have alerts or flags appear near items to point the staff member to the item they’re looking for. This can address the picking workflow and simply be used to identify issues at the shelf. It also aligns nicely with some of the gamification efforts taking place in app development today. These new technologies and applications engage younger workers on a greater scale, allowing them to be more productive.
- Another technology gaining mindshare is the “cobot” approach – a collaborative robot that essentially follows a human around a shopping environment – or meets up when ready – to help move picked items to the packing or staging station. This allows the associate to be more efficient and, perhaps even more importantly, reduces the strain on that worker – something becoming critically important in this environment of labor scarcity and increasing labor costs. Robots and automation more broadly have been in use in warehouses and DCs for years. If deployed properly there’s no reason a front of store deployment isn’t feasible – especially if one envisions a store that deploys cobots and staff for picking before the store is open to the public. This minimizes the risks of any incidents and ensures your staff is ready to deliver exemplary customer service when the doors do open.
- Location sensing technology can also be very useful in this new retail environment. Envision being able to select a product to be picked and – via a handheld device and locationing technology – be able to path the picker to the item to be picked in the most efficient manner possible. In a warehouse environment, you often have staff who are very familiar with how the DC is laid out and can very quickly navigate to a product slot. Front-of-store staff are generally much more trained on customer service-focused tasks and less familiar with where the products are physically located – which of course makes sense as that wasn’t something they needed to be concerned about as you and I navigated the stores ourselves.
Not Sure What to Do Now? Or Next? Look to the Data.
The other angle to all of this is data. The best technology deployment in the world is challenging to evaluate if you don’t have access to clear performance data that allows you to calculate the ROI. Understanding, for example, how many items a store associate can pick per hour allows you to determine the lift involved in deploying new technology. Applying machine learning to that data then allows one to determine what they may be able to expect in terms of a performance lift. That’s where advanced analytics can make the objective call as to where various technologies make sense and reduce the time needed to pilot said solutions. (Time is not something retailers have a lot of these days!)
Simply put, there is a lot of trialing going on right now – from dusting off older technologies that were previously trialed and shelved to newer technologies that have gained steam over the past 18 months. Regardless of vertical, it is hard – if not impossible – to make margin if you’re leveraging old technologies and workflows. The expectations of consumers related to speed, accuracy and customer service have changed, and much of that change is permanent. As a shopper, I may be very interested in coming back into your store, interacting with staff, and touching and feeling items that were relegated to a screen for the past 18 months. But my expectations around BOPIS/curbside pickup are much higher now, and mis-picked items or long wait times are a deal breaker for me.
For good retailers to survive the “new normal,” a change in mindset needs to take place. Stores will need to rapidly adapt and technologies will need to change. The good news is that technologies already in use upstream can, in many cases, be migrated down to the store level. The challenge will be determining if your associates are ready to adapt. Given all the changes forced on them because of COVID-19, I think you’ll find them ready to embrace new technologies faster than in the past. The question perhaps then becomes, which one makes sense for your environment?
If you’d like help reviewing your current operations and challenges and identifying areas where technology can be applied to help make improvements, reach out to me or a member of the Zebra retail team. We can schedule a discovery session to see what the best next step should be to streamline workflows and strengthen your in-store execution of online order fulfillment.
If you’re attending RSPA Retail Now later this month, make plans to attend Mark’s session on Tuesday, July 27 from 1:15 PM – 2:00 PM: “Brick and Mortars: The New Warehouse.”