Benefits of In Store Automation

The retail business runs on wafer thin margins. As a result, every additional dollar that the store is able to generate in sales or save by reducing costs matters to the bottom line. It is for this reason that retail stores across the world have felt the need to automate their in-store operations.

Retail automation has been linked with many financial benefits such as increased sales and lower costs. It has also been linked with other benefits such as a higher engagement rate. There are many such other benefits that accompany a high degree of in store automation. This is the reason that despite higher costs, retailers around the world are continuously investing money in automation of in store experience.

In this article, we will have a closer look at some of the financial benefits which are commonly derived from in store operations. The list of these financial benefits has been mentioned below:

  1. Scalability: One of the main objectives of in store automation is to reduce the amount of manual labour which is required to perform a task. If in-store automation is strategically followed for some years, then retailers are able to drastically reduce their dependence on manual labour. This benefits them in multiple ways since recruiting, training and deploying human resources tends to be much more time consuming as compared to simply deploying technology.

    Hence, retailers which follow a more technology intensive business model are able to scale up their business and open stores in new locations at a faster pace as compared to others who take a more manual approach.

  2. More Operational Hours: Once retail stores can work with fewer human employees, they are less bound by constraints imposed by employing human beings. As a result, these stores can operate in multiple shifts and can work on public holidays as well without facing the human resource constraint which is generally applicable to other retail stores.

    More operational hours generally translate to more customer satisfaction as well higher sales in general.

  3. Higher Footfall: In store automation has been linked with a better in store experience. There are many customers from younger generations who value these in store experiences highly. It is for this reason that they tend to visit malls which offer such experiences more often.

    There have been several surveys conducted which confirm the fact that automation does lead to both a positive customer experience as well a higher footfall. Both these parameters tend to influence the bottom line in the retail business. It is for this reason that in store automation is highly valued by some retailers.

  4. Higher Sales: In store automation has also been associated not only with higher footfall but also with higher sales. This is because customers believe that they can get all the benefits of an online store by shopping in such stores. Also, they can get additional benefits such as being able to try the products in real time as well as faster exchange or return of products. The end result is that brick and mortar stores are able to obtain some of the customer dollars which would have been otherwise spent in online stores.

  5. Lower Costs: In store automation of retail stores obviously leads to a lower running cost of the stores in the long run. It needs to be understood that such cost savings are higher in countries where labour costs are higher. This is because the cost to deploy the technology tends to be almost similar in both developing as well as developed nations.

    However, since retailers are required to pay higher wages in developed nations, they have a greater incentive to lower the costs by implementing automation. This is the reason that retailers are implementing automation on a larger scale in such countries.

  6. Lower Chances of Theft: Retail stores also tend to collect large amounts of cash when they sell goods and services to their customers. As a result, these stores tend to have high volumes of cash in their cash register which may expose them to the threat of robbery.

    A higher degree of automation means that most customers pay with credit cards using self-checkout counters. As a result, there isn’t much cash present in the store which reduces the probability of theft or robbery happening within the store.

  7. Data Collection: One of the benefits of automation is that a large amount of data gets generated and stored. This data is generated by all the mechanized equipment and software which is used to automate the business process. If the retailers are able to augment this data appropriately, they can use data mining techniques in order to understand more about the customer persona. This helps them collect data which can be used to create more accurate marketing and promotional materials which can eventually lead to better sales.

Hence, it can be said that in store automation in the retail sector provides many monetary benefits to retailers. Also, companies need to ensure that they maintain some kind of balance when it comes to automating retail stores as well as warehouses. If they continue to automate any one of these without paying attention to the other, it could lead to financial losses. This is the reason why there has been an increasing trend of deploying in store automations as well. However, there are certain downsides to such automation as well. These downsides will be discussed in the next article.


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Finance in Retail