Is Automation the Answer to Solving Labor Shortages?

With labor shortages a very real problem, retailers are prioritizing making processes as efficient as possible to keep the customer experience streamlined. In a recent CX report, PwC surveyed 15,000 consumers and found that one in three would stop buying from a retailer after only one bad experience.

Retailers can’t afford to ignore expectations in order to retain the customer base they have. In 2023, the customer loyalty management market is valued at over $5.5 billion and could surpass $24 billion by the end of 2028.

Deloitte’s 2023 Retail Industry Outlook revealed that seven in 10 executives believe that labor is the main challenge for 2023. Furthermore, in November 2022, it was revealed that 879,000 retail jobs remained unfilled in the U.S. To address this, retailers turned to assisted artificial intelligence operations to alleviate some of the pressure.

Integrating Automation

Integrating AI solutions enables employees to focus on more valuable tasks that free up their time. Automation in retail plays an important role across numerous areas of a business, making operations within order fulfillment, inventory management, fraud prevention, store management and customer care more effective.

Investing in these technologies requires data to be connected to other data sources (such as the cloud) and that applications are connected to work in real time with each other. Once this data is flowing seamlessly, common tasks or workflows are able to be automated.

Introducing self-checkout is one way retailers can modernize and transform checkout zones, with the convenience of not having to wait a big plus for customers. Self-checkout also allows stores to generate more revenue and make more profits in less time, offer a quick and hassle-free shopping experience, and reduce operational costs.

Using a self-checkout can also make it easier to manage inventory through the point of sale. This makes it easier for businesses to keep track of products coming in and out of stores while the placement of the tills maximizes traffic flow, visibility and security.

Traditional vs. Modern Retail Operations

With the emergence and convenience of online shopping, the appeal of conventional retail has changed significantly. With the pandemic shaking up the industry, many retailers swiftly adapted to a new retail landscape, moving into e-commerce and embracing interactive technology.

In the U.S. for example, e-commerce increased by 50 percent from $907.9 billion in 2022, with a rise to $1.4 trillion in 2025 predicted. This reflects a change in demand for a simpler online shopping experience, something that coincides with a drop in footfall for brick-and-mortar stores. And with the global CX management market already reaching $8.79 billion in 2021 and likely to grow 18.1 percent every year from 2022 to 2030, it can only harm retailers that don't keep up with their competitors.

To modernize more traditional ways of working, retailers need to first make changes to the systems and technology they're using. The use of technology in retail can help to create more memorable customer experiences, but only if the company is willing to embrace automation and self-service. When compared, it's surprising how cost effective technology-driven systems can be against manual solutions.

The Future is Automated

Automation has already changed how the logistics and manufacturing industry works, and in a bid to resolve labor shortage issues and make retail more efficient, it’s not just e-commerce but brick-and-mortar stores that are reaping the benefits.

There’s already evidence that automated retail is a fast-growing and influential trend and has been on an upward trajectory in recent years. And in 2022, as many as a third of retailers stated they were looking to invest in self-serve tills and/or smart vending, something that as it's rolled out will inevitably lead to a noticeable change.

The use of automation in retail will continue to reshape the shopping experience. Thanks to the integration of advanced technologies, vendor relationships can be improved and access to real-time data insights can offer bespoke customer experiences. However, as automation continues to grow, it's important to continue to address the challenges it will present as well as the opportunities it can provide.

Ailen Bilharz is the director of iD Cloud Platform North America at Nedap Retail, a provider of RFID retail solutions.