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In the UK 2018 was a tough year for retail and so far 2019 seems to be following a similar path.
2018 had some of the most difficult trading conditions in modern times leading to a sizeable number of job losses and business going into administration - just think of Homebase, New Look, Carpetright, Office Outlet, Mothercare, HMV and more. Statistics suggest that over 46,000 retail jobs were affected in the UK across nearly 2,600 retail store locations.
What's more the same statistics show that 2019 has already been nearly as challenging with some 31,000 employees affected as a result of 21 companies failing between January 2019 and April 2019. Big news casualties have included Debenhams, Office Outlet, Patisserie Valerie and many others.
We accept that failure in retail can often be a temporary inconvenience until other funding arrangements or M&A activity have been processed but it still makes a significant dent on customer confidence and brand loyalty.
What's striking is that in the face of all of this market disturbance retailers and the brands that they stock are still pushing for innovation and transformation. They are using technology to deliver enhanced experiences, better understand customers and target promotions. They are looking to remove the friction from the payments and checkout process. Let's consider some recent themes to bring this to life.
The first 'Amazon Go' store opened to employees on December 5, 2016 and to the public on January 22, 2018. It was much publicised and saw long queues looking to experience what Amazon calls its ‘Just Walk Out’ (JWO) shopping. According to Amazon the store concept uses technologies including computer vision, deep learning algorithms and sensor fusion to automate much of the transactional process.
Customers check-in by scanning a unique code, place their items in their basket and walk out with sensors and cameras monitoring movements of products to ensure accuracy. It's worth noting that many of these technologies are still being refined; public rollout of the prototype location was delayed for example due to issues with the sensors' ability to track multiple users or objects within the store such as when children move items to other shelves.
Amazon has been rumoured to consider plans to open as many as 3,000 Amazon Go locations across the United States by 2021 and a new Amazon Go store opened in New York City in May 2019.
In the UK there has also been emerging interest in the concept with Sainsbury’s Holborn Circus Local store being refurbished to be mobile-first and check-out free. Customers scan and pay for their groceries as they progress roung the store using the SmartShop Scan, Pay & Go app which they download on their smartphone. They use the app to pay and scan a QR code before leaving with no need to queue or pay at a till. The experiment will last for the next three months.
In late 2015 Adidas opened a new, heavily automated manufacturing site in Ansbach, Germany. The concept was called 'Speedfactory' and combines a small human workforce with a range of technologies including 3D printing, robotic arms and computerised knitting in order to rapidly produce running shoes for the European market. The focus is on speed and customisation - the customer can select from a range of digital designs that can be easily tweaked and produced by robotic manufacturing lines.
It's important to remember that sports shoes aren’t just made in one factory but often the product of a sprawling network of suppliers in different cities or even different geographies, each with transportation and logistics delays. From start to finish it can take 60 days to make a shoe using conventional processes but Adidas has reduced the whole process to a couple of days or sometimes even a single day. Adidas also says processes that aren’t currently part of the set up, like knitting the fabric for the upper, or 3D printing midsoles, could be easily integrated. This whole innovation makes Adidas dramatically faster and more flexible in how it produces its shoes and in the way it can respond to online trends and customer expectations.
Because so much of the work is automated there are various productivity and efficiency benefits. Adidas needs 160 employees at the Speedfactory location as opposed to between 500 to 1,000 in a typical Asian factory producing sportswear. The Speedfactory process itself also delivers efficiencies with each part it makes being tagged with a scannable QR code. During quality control checks any problems can be traced back to the individual machine that made it and the settings were on the machine at the time it was made.
Ultimately Speedfactory is a learning process for Adidas - they can test and optimise production methods and then put in place what they’ve learned in the contract factories in Asia. They can rapidly produce styles that respond to fast fashion or limited custom runs (an estimated 500,000 pairs of trainers per year) but this will still be a small dent in Adidas' overall 360 million pairs of shoes produced.
Logistics and warehouse innovation continues at pace. In the UK Ocado continues to invest in warehouse capability with 1,000 robots at its main site able to put together a 50-item order in five minutes compared with the two hours that it previously took. Use of robots have made it possible to fulfil as many orders as an earlier warehouse which was three-times the size and employed 600 people, versus the 200 currently required.
Amazon has again been at the forefront of robotics in its warehouses. In 2014, Amazon began rolling out robots to its warehouses using machines originally developed by Kiva Systems, a company Amazon bought for $775 million two years earlier and renamed Amazon Robotics. Hundreds of robots move autonomously inside a large caged area, tailgating each other but not colliding.
On one edge of the cage, a group of human workers — the “stowers” — stuff products onto the shelves, replenishing their inventory. The robots whisk those shelves away and when a customer order arrives for products stored on their backs, they queue up at stations on another edge of the cage ready to carry the palette containing the customer item for picking. Human “pickers” follow instructions on computer screens, grabbing items off the shelves and putting them in plastic bins, which then disappear on conveyor belts destined for “packers,” people who put the products in cardboard boxes bound for customers.
Amazon is estimated to have more than 100,000 robots in action around the world, and it has plans to add many more. Each Kiva-equipped warehouse can hold 50% more inventory per square foot than centres without robots. In turn, the company's operating costs have been cut by 20% - or almost $22 million - per warehouse.
The Amazon warehouse in Florence shows the latest example of the kinds of jobs machines can do better than people. Eight mechanical arms are in operation at the facility, a warehouse where large quantities of merchandise are broken down into smaller units and distributed to Amazon fulfilment centres across the country.
We built On My Way to allow customers to see all the information they need to know about their planned service appointment. This includes appointment address, time and delivery window, technician name and their badge ID and photograph alongside the real-time location of the service engineer shown graphically on a live map.
On My Way also lets you get direct feedback from customers who have used the service. This feedback is taken during the service transaction itself, whilst the customer is viewing and interacting with On My Way and waiting for their service engineer to arrive.
Why not take a look and speak to us for more information.
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