Blog | Sep 5, 2019

RPA & Retail - The Devil is in the Details

RPA Retail

Barely a day goes by when every news service isn’t reporting about the crisis in the retail industry, with changing shopper habits and the death of the High Street. There is little doubt that retailing as we knew it will not exist in the future, or it will be a radically different experience. The emergence of the millennial browser shopper armed with nothing more than a smart phone is commonplace and hunter gatherer shoppers with shoulders like weightlifters are declining massively with the proliferation of home deliveries and the promise of “carry nothing - same day” instant gratification drone delivery.

There is an old adage “retail is detail”, which means that if you look after the small microscopic details about brand, product mix and offering, price, size, color, season, merchandising, weather, shopper demographics, planning, placement, store size, location, etc., etc., etc., then everything else will happily look after itself. This is the retail version of “look after the pennies and the pounds will look after themselves”, and there is more than a grain of truth in this. If you create a brand promise and deliver on that promise flawlessly, then you will excite and surprise your clientele, which is a sure-fire way to retain their interest, patronage and spend.

I learned a very salient lesson 20+ years ago sitting in the office of a junior executive at a major global retailer (who went on to become the CEO of said organization) and after months of diligent solution selling, ensuring every objection had been addressed and every influencer was fully supportive of the solution being proposed, it ultimately came down to one killer question: “how many tins of beans do I need to sell to pay for this solution?”. Now, I must confess I didn’t know the cost of a tin of beans, and I still don’t. So, I took a stab in the dark, chose 25p, divided the cost of my solution by 4 and answered the question. The executive with a smile said, “nice try, on average we make 0.69p profit on every tin of beans we sell” and responding to that with my new-found intelligence took slightly longer. The lesson was - the focus for retailers large and small is to make fractions of pennies on everything they sell.

So, if it’s that simple why are retailers having huge problems? Why are customers so fickle? And why are costs so out of control for successful organizations, which historically delivered huge revenues and substantial profits, yet are now having such hard times? There is no doubt that traditional brick and mortar retailing is getting increasingly expensive with retailers committed to long term property arrangements in a rapidly evolving market, which online retailing does not incur. But “retail is detail”, and whether your proposition is offered physically or virtually, you still have to get a myriad of details correct or your proposition will just not resonate, or worse still, will only resonate for a very short period before the inevitable decline sets in. Once the decline starts, it picks up speed very rapidly and reversing that trend requires a Herculean effort.

Creating a compelling proposition with retail merchandising has always been the domain of artisans crafting something attractive and highly desirable, something that will enhance the customers’ lifestyle, social standing, self-belief and personal kudos. Building an experience in-store rather than online, as Apple has proved globally with their retail experience, takes consumers to a higher showroom shopping experience. But supporting this artisan experience requires detail, detail, detail, and cost, cost, cost.

Many traditional retailers have veritable armies of workers. In fact, all the major grocery chains employ far more staff than any countries armed services personnel added together. Is there any wonder that retailers are struggling with a constant demand to stay fresh and innovative (relevance), whilst making tiny profits on trillions of items (effectiveness), whilst employing huge numbers of people (optimization)?

This question is very easy to ask, but almost impossible to answer. Perhaps the question should be: “is there a way to stay relevant, whilst increasing effectiveness and optimizing the whole business?” Artificial Intelligence hints towards a new paradigm not only for retailers but for other people-intensive industry sectors, enabling an organization to focus on the important activities and allow boring, mundane and repetitive activities to be automated. A solution delivering new levels of speed and cost optimization is the nirvana that currently eludes modern retailers.

Retail is the final link in a very complicated supply chain that brings an unparalleled selection of products to every consumer. That supply chain is not only hideously complicated, it is phenomenally repetitive and must be supported by many other business critical functions which loads of additional costs, constantly eroding the profit margins of the humble tin of beans mentioned earlier. Anything that can reduce the complexity and cost, automate the repetition, and streamline the supporting activities offers a beacon of hope to the struggling retailer desperately wanting to impress their consumers.

Robotic Process Automation (RPA) is already automating a vast array of supply chain activity from order management, category management, contract management, requisition to pay, vendor managed inventory, supplier relationship management, spend analytics, and supplier risk management, to name a few, and that’s not forgetting the management of the physical flow of products and the corresponding data. But RPA also addresses the vast array of supporting functions, like HR with staff selection, on-boarding, training, time recording, payroll, holidays, sickness, health and safety, etc. Finance to optimize the availability and flow of cash (the lifeblood of every organization, but retail especially) as well as accounts payable and receivable, cash management, pricing, contract terms management, regulatory compliance and so on, and so forth.

RPA is already having a huge impact at innovative global retailers, affecting every facet of their business, optimizing costs and creating a competitive position that others could only dream of attaining.

There is no doubt that “retail is detail”, it always has been and it always will be. But perhaps the time has come for digital workers to look after the boring, mundane and repetitive activities that are so critical to the success of every retailer, at a fraction of the cost of existing business activities. Because, as the saying goes, “if you look after the pennies the pounds will look after themselves.”