Shawn is a 20-year veteran of the retail industry and the Director N.A. Sales for SmartSight, Zebra’s intelligent automation retail service.
Brick-and-mortar retailers are no strangers to change. They’ve spent the last several years trying to remain relevant amidst the rise in ecommerce competition. Enhancing the “offline” in-store customer experience while establishing a sustainable online business has not been easy or economical for most brands. The shift to ecommerce fulfillment models is eroding margins by the minute. Yet retailers know that if they can’t figure out a way to become relevant in the digital realm, then the consequences of brand erosion will be far greater.
With Covid-19 accelerating consumer adoption of curbside and delivery services, retailers and grocers must find a way to differentiate the customer experience in stores and online. Moreover, they must do so while improving profitability — or at least without broadening financial deficits beyond recovery potential.
The ‘Benefit Of Bulk’ Is Bygone
The acceleration of ecommerce adoption has forced brick-and-mortar retailers to use stores as online order fulfillment centers to meet shopper demands for convenience and delivery speed. The cost of having to handle individual items versus pallets in the stores has become quite significant. It has also become expensive to maintain a wider product assortment and increase store staffing to facilitate omnichannel fulfillment actions.
The “labor headwinds” of turning stores into fulfillment centers can eat up 2%-3% of a retailer’s profitability on its own, per McKinsey and Co.’s estimations. Of course, some of that can be recovered by leveraging analytics tools to improve inventory management (1%-2% profitability boost) and focusing on ways to improve the in-store customer experience (which has the potential of providing another 1%-2% profitability increase).
Yet much of what goes into the latter can be addressed via intelligent automation, which,