Automation beckons retailers as labor challenges endure

To help deal with a persistent labor shortage that has severely tested their ability to keep stores staffed and stocked, grocers are stepping up efforts to mechanize a range of essential tasks that historically have been handled by people. 

This includes adding more self-checkout terminals to stores and relying on automation tools that help them update prices and manage their inventory. Many of these tools have been available to food retailers, and they’re getting a closer look nowadays as the industry confronts what looks to be a long-term hiring and retention challenge.

But as retailers increase their reliance on time-tested automation solutions, they are also tackling pressing questions about the role human workers will play in supermarkets in the future, industry experts said.

Having workers perform tasks that technology can easily replace probably isn’t the best use of people’s time, said Gautham Vadakkepatt, director of the Center for Retail Transformation at the George Mason University School of Business. “Companies are getting smarter to that and saying given the new environment we’re operating in, let’s do this with automation and use our talented workforce in a context that actually adds value to the company,” he said.

Automation may be able to save retailers money and speed customers through stores, but human workers play a critical role ensuring that the experience of going shopping is satisfying for shoppers, Vadakkepatt said.

“Humans have that innate tendency to be able to address problems, solve problems, and that’s where we’ll see humans being deployed,” he said.

A balancing act for retailers

The challenges retailers are facing in hiring and retaining workers are presenting a compelling reason for grocers to embrace technology in ways they might not have in the past, said Henry Michaelson, co-founder, president and chief technology officer of Halla, which provides personalization technology to retailers.

“I think labor shortages are pushing us into the future, and the grocers are smartly using this as an opportunity for growth,” said Michaelson. 

Neil Stern, CEO of West Coast supermarket chain Good Food Holdings, said retailers are facing a complex balancing act as they navigate the labor crisis confronting the industry. “We have physical stores, we have customers coming in, we have shelves that need to be stocked,” he said. “I still need people to show up for work … in an environment right now that’s pretty challenging” because of the pandemic.

Good Food, which operates about 50 supermarkets under banners including Bristol Farms, Metropolitan Market and New Seasons Market, is significantly increasing its use of technology to maintain operations, Stern said. Self-checkout is a particular area of focus for the company because of its ability to help move customers along, he said.

“This is not just about an opportunity for retailers to save some labor on the front end, but it’s actually what the customer is preferring as a way to check out,” said Stern, noting that the Good Food dedicates one worker to monitoring every four self-checkout units.

Reflecting the importance shoppers place on convenience, more than three-quarters of consumers who participated in a survey conducted in December by mobile data company Anyline said they would be more likely to shop in a store if it offered scan-and-go checkout technology. Anyline is working on technology to allow shoppers who use scan-and-go systems to buy age-restricted products such as alcohol without interacting with a store employee, said the company’s co-founder and CEO, Lukas Kinigadner.

Stern said shoppers are increasingly interested in moving through stores quickly, a dynamic that in many cases is causing people to place a premium on automation when visiting Good Food’s stores. That focus is especially noticeable at foodservice counters, where shoppers sometimes have to wait for service, he said, so Good Food is installing sandwich-ordering kiosks to speed things up.

“You can say, ‘Isn’t it wonderful, all that interaction you’re going to get from us?’ but I think customers are also saying, ‘There’s got to be a better way. If I want to get a sandwich made, I’ll go use an app or use a kiosk to get it made, and I’m just picking it up,'” Stern said.

Good Food also will be testing smart carts, which use computer vision to record items as shoppers remove them from shelves, in some stores this year in partnership with Veeve, according to Stern. The retailer is also planning to pilot electronic shelf tags in 2022, he said.

While electronic shelf tags can help save on labor costs because they take less work to maintain, that alone doesn’t provide a substantial enough return to justify investing in them, Stern said. But when the digital price displays are used to also facilitate dynamic pricing, they become much more compelling, he said.

“That’s a big use case that I think a lot of retailers are going to be looking at,” he said. 

Stern said Good Food is also looking into technology like the aisle-scanning robots produced by Simbe Robotics to automate inventory tracking in its stores, but hasn’t decided whether to proceed.

Wholesalers, which have had a hard time hiring and retaining workers during the pandemic, are also embracing automation in more areas, said Marco Di Marino, director in consulting firm AlixPartners’ retail and grocery division. He cited as an example robots that can efficiently build pallets of products before getting loaded onto supply trucks.

“When robots put stuff on the pallet, they do it better,” Di Marino said.

The challenging labor market is also causing retailers to look for ways to increase the efficiency of their e-commerce operations, particularly the speed with which they are able to fulfill orders, according to emailed comments from Neil Moses, CEO of Wynshop, which provides e-commerce technology to retailers.

Nearly 80% of grocers who participated in a 2021 study conducted by Wynshop and research firm Incisiv said “improving picking efficiency” topped their list of ways to improve profitability, Moses said.

Mike LaVitola, co-founder and CEO of convenience store chain Foxtrot, said he is looking to technology that handles repetitive tasks like ringing up orders to enhance his company’s ability to provide products that help it stand out with customers. Foxtrot is investing heavily in technology, an effort that includes testing computer vision-based frictionless checkout technology in multiple stores, as it works to enhance capabilities like inventory management and personalization.

LaVitola said he wants Foxtrot’s staff to be able to focus as much as possible on curating its selection of products, which includes a broad array of locally sourced and private label goods.

“If you think about our [stores], everything on that shelf has been tested and argued over … and so that means that all those products have a story behind them,” LaVitola said. “That’s really what we want the teams in our store focused on.”

Recognizing the limits of technology

While the convergence of swiftly rising labor costs and rapid advances in fields like artificial intelligence and computer vision has created conditions ripe for retailers to embrace innovation, it is also raising questions about the level of automation that makes sense for grocers, said Saibal Ray, academic director of the Bensadoun School of Retail Management at Canada’s McGill University.

“From an economics viewpoint, more and more automation in some way is going to make more and more sense,” because technology is becoming less expensive at the same time that retailers are having to offer higher pay to attract and retain workers, said Ray.

At the same time, systems like self-checkout kiosks, smartphone-based ordering facilities and technology that records people’s purchases automatically can introduce obstacles that frustrate shoppers by adding friction to the shopping experience even as retailers seek to remove it, Ray said.

For example, requiring people to download an app or set up an account to make purchases can make shopping less convenient, potentially turning shoppers away, he noted. Meanwhile, self-checkout systems may provide benefits to retailers, but they can also turn off shoppers asked to do work store employees used to handle, Ray added.

“The consumer is doing the job for self-checkout and [asking], ‘Am I getting any benefit out of it? Am I getting a cost reduction or not?'” he said.

LaVitola agreed that going too far down the tech route can disrupt the retail experience for consumers.

“What we want to be really careful of is not just jamming a whole bunch of technology in … but to really have it fade away in the background to create a better experience for both our employees and for customers,” he said.

Beyond helping retailers manage their operations with fewer workers, technology can serve as a draw for prospective employees by adding a dose of excitement to retail jobs, said David Gottlieb, chief revenue officer of Trax, a computer vision company that serves retailers.

“There’s definitely an opportunity as you think about these next-generation technologies to provide benefit not only to the store as a whole because you’re driving down costs and driving up availability, but also to the associate and to their appetite to stay with the job, because now you’re giving them a cool piece of technology” to work with, Gottlieb said.

Jeff Wells contributed to this story.