How automation reduces shrink and increases profitability

As senior vice president of product management for Invafresh, Joe Smirlies is recognized as one of the world’s foremost experts in sustainable fresh-native technology solutions. With over 30 years of experience in the grocery technology sector, Smirlies brings the depth and breadth of expertise to service fresh food retailers with innovative technologies to shape the future of fresh food retailing.

Within the grocery industry, the term automation encompasses a multitude of facets. From an industry-wide perspective, automation describes the use of robots to process, pack, and sort items along the entire supply chain, from growers to distribution centers, warehouses, and stores.

For the purposes of this column, store automation describes the process by which grocers incorporate technologies that can significantly reduce manual tasks within supermarkets, such as inventory management, replenishment, and demand forecasting.

Benefits of automation

As automation increases and optimizes retail processes inside brick-and-mortar locations, leaders in the grocery industry are, for the most part, eager to embrace automation for the clear benefits it brings forth. These include a reduction in labor costs, obviously, and in addition, the advantages conferred by diverse applications resulting from the wealth of valuable data generated, collected, and analyzed.

For example, grocery retailers can leverage this data to optimize supply chains, comprehend customer preferences, minimize food waste, increase food safety and traceability, and enhance operational efficiency. Furthermore, data-driven decision-making empowers retailers to anticipate demand, personalize marketing strategies, and optimize pricing and promotions.

Inventory management — mitigates food waste

Accurate inventory management plays a critical role in the efficient operation of a successful grocery store, and grocery retailers can attain precise and real-time inventory management through store automation. Automated inventory management mitigates waste by guaranteeing accurate stock levels, thereby minimizing the risk of overstocking or understocking items. On the other hand, traditional or non-automated manual inventory processes tend to be very time-consuming and highly prone to human errors, resulting in disparities between actual stock levels and recorded data. Consequently, grocery retailers who embrace store automation of retail processes can achieve improved cost control and maximize profitability.

Food safety

Ensuring food safety and maintaining quality control are paramount concerns in the grocery industry, especially in the produce department and meat department, where store automation plays a key role in safeguarding the freshness and safety of products. For example, by employing automated systems, temperature and humidity levels in storage areas can be closely monitored and regulated, optimizing the storage conditions for perishable goods. This, in turn, extends the shelf life of products, reducing food waste and increasing profitability.

The Northeastern region chain Price Chopper deploys store automation specifically to predict the correct amounts of product to stock in order to meet customer demand, while reducing exposure to excess shrink and improving sustainability by limiting the spoilage that ends up in the landfill. Customers also value transparency and traceability. For items that get transformed, if I'm taking that piece of steak and I'm breaking it down, I'm required to label it in the store to mean something else.

Traceability

In addition, according to research recently published by FMI, the majority of consumers surveyed said that traceability is a key enabler of trust between grocers and consumers, and store automation serves to support this by enhancing comprehensive traceability throughout the fresh supply chain.

Through the scanning of RFID tags or barcodes, retailers can effectively track and trace the journey of each product, from its manufacturing origins to the store shelves. This traceability feature proves invaluable in cases of product recalls or quality concerns. By promptly addressing such issues, retailers ensure customer safety and mitigate potential reputational risks. Manually collected traceability data is likely to be slow and highly prone to human error. In other words, an untrustworthy process.

Concerns — ensuring store automation is implemented ethically and responsibly

When it comes to addressing the long-term impact of automation on the industry, although the benefits are clear, it is and will remain crucial for industry leaders to consider the social and economic impacts of automation on workers and communities and develop strategies to support affected individuals. The transition to store automation in the grocery industry requires the existing workforce to adapt to new technologies and processes, and leaders must make the necessary investment to ensure employees are provided with the proper amount of training to operate and maintain automated systems effectively.

Additionally, store leadership needs to pay very close attention to employee morale and be especially proactive when addressing concerns about job security during the automation implementation process.

Through responsible and strategic adoption, store automation can revolutionize the grocery industry, providing a win-win-win scenario for retailers, employees, and consumers alike.