Outfitted with cameras and sensors.
This autonomous robot is verifying price signs and
looking for out of stock items.
These cameras on the side are capturing images of the
shelves that are then uploaded to our cloud
environment to determine what products are
out-of-stock, what's mispriced, what's in the
wrong position.
Inventory is one of the biggest challenges retailers
face. Missed sales from empty shelves and
out-of-stock items cost US retailers $82 billion in
2021, or about $1.6 billion a week.
So this would tell us that the Snickers is low and we
probably need to get more Snickers dropped from our
back stock and brought out to the floor.
Almost half of retailers said out-of-stock items were
their biggest challenge in fulfilling customers orders.
Retailers are spending a lot of money to know what's
coming into their stores through their inventory
systems. They know quite a bit about what they're
selling and that are leaving their stores, but in
their stores on a daily basis,they don't have a very
good model of what's actually happening on their
shelves.
But an army of inventory robots is being deployed
that would help retailers appease angry customers,
boost sales and respond to the ongoing worker shortage.
Almost 900,000 retail jobs were unfilled at the end of
November 2022.
The retail industry employs more than 30 million
Americans.
Retailers are competing in a very tight labor market
still, and they're often having trouble filling jobs
that are more physically intensive, like packing a
box or refilling a shelf.
So instead they're using robots in some cases or
automation to fill those types of tasks and having
people do skills that use their brain, that use some
of the skills that a robot would have a harder time
replicating.
These robots are really going to help
brick-and-mortar to evolve and capture sort of the new
market where you can order online, pick up in store.
The inventory robot market is a $34 billion industry.
Other companies in the space include Simbe Robotics
and Bossa Nova Robotics.
So what impact will inventory robots have on US
retailers and the livelihood of its workers?
Keeping shelves fully stocked has been a full time
job for retailers in recent years.
Fewer truck drivers, higher fuel prices, supplier
issues, severe weather and changing consumer
preferences have caused a shortage in everything from
toilet paper and eggs to baby formula.
The baby formula shortage is getting worse.
Grocery store shortages are back again.
Tonight, empty shelves lining more stores
nationwide. Some retailers complaining product
shortages are becoming as bad as they were at the
start of the pandemic.
An out-of-stock item is when a shopper leaves a store
without purchasing what they intended to buy.
The product could be in a warehouse, in a different
aisle or on the shelf, but blocked by a sign or
display.
The biggest challenge that supermarkets have today is
out-of-stocks. Being able to, you know, really handle
how to get inventory on the shelves.
That's their number one challenge today.
While some issues are driven by supply, demand is also an
issue. The rise in pet ownership in the US, for
example, led to shortages for products like food for
dogs and cats.
About 23 million American households adopted a pet
during the pandemic.
And the problem isn't necessarily a new one.
A key component of retail operations is having the
correct amount of inventory on hand and making it
available to shoppers.
On average for every dollar US retailers make they have
a $1.35 worth of inventory in stock.
In the old days, 20-30 years ago, the way of reconciling
our data with our reality was to do physical counts.
We would send people down the aisles and they would
physically count. We have six of this item, two of
this item. They'd be punching it into a handheld
device and it would be flagging anything that was
mismatched. This could take weeks.
Not having a product available for purchase,
while frustrating for a customer, is potentially
disastrous for a retailer.
Out-of-stocks costs retailers not just the loss
of the initial sale, but in some cases the loss of a
secondary sale and potentially the loss of
customer loyalty.
Confronted with an empty shelf, 20% of consumers said
they postponed their purchase, 10% went elsewhere
and 16% shopped online.
Excess inventory in some cases is an even bigger
problem. Surplus inventory is when a retailer has too
many products on hand, like a glut of winter coats in
the Spring, or an oversupply of patio
furniture in the Fall.
In many cases, those products need to be heavily
discounted.
If we've invested all of our money in purchasing a
product that doesn't actually sell, we typically
see retailers having to sell it off below purchase
cost. So they've lost money on it, but more importantly,
they've lost opportunities.
Often if it's truly surplus and has to be either thrown
away or salvaged.
To help manage their inventories. A growing
number of retailers like Sam's Club and BJ's
Wholesale are turning to robotics and automation to
beef up their operations.
Inspecting store aisles has historically been the job of
retail workers who check inventory, verify price tag
compliance and maintain the ideal state of the store.
When done by a human, the job is laborious, costly,
and not always entirely accurate.
Based in San Diego, California, Brain Corp.
got its start in 2009 as a research project for
Qualcomm.
Before moving into inventory scanning, it first developed
self-driving technology for floor cleaners.
We looked at an application where there was a really
high labor component and a very repetitive sort of the
typical robotics dirty, dangerous, dull task.
And that led us into the cleaning industry.
With just 50 machines deployed in 2017, the
company raised $114 million in funding led by the
SoftBank Vision Fund.
Today, it has over 26,000 robots in schools, airports
and hospitals.
We started looking in that retail space and trying to
find what are the other problems that our robots may
be able to solve.
In 2022, Walmart-owned Sam's Club expanded its
relationship with Brain Corp, adding inventory
robots to its 600 stores.
The dual purpose machines manufactured by Tenet use
technology by Brain Corp to move autonomously through
the store, cleaning floors and acquiring data along the
way. Robots like this one have as many as five cameras
used to scan store shelves, as well as 3D cameras to
assist with navigation.
Customers purchase the physical machine from a
third party manufacturer and pay a monthly fee for
the software. The software subscription for a cleaning
robot is in the hundreds of dollars per month.
The inventory scanning is a little more.
We've got four cameras on the side that would be
facing the shelf as it's navigating down the aisle to
scan it. And we've got another camera on the far
side to be able to look upward at what we call
reserve steel sections of the retail stores that have
their products on the uppermost shelves.
All that information is uploaded to the cloud and
it's in the cloud where we really have the intelligence
layers. So that's where we have models that are trained
on making sense of the images, understanding that
that's Snickers. And this is a jelly bean, for
example, but also the price sign information.
For retailers that are adding inventory robots, one
of the advantages is they also are collecting a lot
more data about what customers do and don't want
by monitoring inventory.
They're not just making sure the shelves are full.
They're also getting demand signals on what's selling
and what's not. And that's one of the things that
retailers often struggle with.
A stock keeping unit is an alphanumeric code a retailer
assigns to a product to distinguish it from one
another. A Walmart superstore, for example, can
have more than 100,000 SKUs compared with a supermarket
that has about 30,000 SKUs.
Inventory robots benefit retailers and other ways,
too, like freeing workers to perform other tasks and
potentially lowering labor costs.
More than a third of US retailers say staff
shortages are their biggest challenge.
Now, before the scrubber, all of this was manual.
It required associates to go out, scan it into the
location, count how much is there, tag in where it is
at, etcetera. So what this scrubber is allowing us to
do is take all this mundane, really routine work
off of our associates.
For example, if a grocery chain with 425 stores had an
employee at each location making $15 an hour who
counted inventory for two hours each day, removing
that one task could save the business more than $4.6
million annually.
This is where the robots can help out.
Being able to do this consistently on a daily
basis, they don't.
They don't call out sick.
They don't get tired. They're ready to run on a
daily basis.
The median salary for a retail sales worker is
$29,000 a year.
More than 50 million US workers quit their job in
2022.
I worked in a small grocery store, so if you were
assigned the baking aisle, you were walking down
physically counting how many little bags of
chocolate chips were in that bin?
How many of each kind of jello?
It was extremely time consuming.
It was very frustrating.
The precision at which you capture the data is just
much higher than a person can do.
Based in San Francisco, Simbe Robotics got its start
in 2014.
The following year, it launched its autonomous
inventory robot Tally.
With more than a dozen cameras, Tally scans between
15 to 30,000 products per hour, taking roughly two
hours to scan a supermarket. BJ's Wholesale
added Tally across its 237 locations in 2023.
On top of inventory robots, warehouse robots are on the
rise as well.
Amazon launched its first fully autonomous robot
Proteus over a decade ago.
Today, the e-commerce giant has more than half a million
warehouse robots worldwide.
The warehouse robotics market was valued at $9.8
billion in 2021 and is expected to reach $23
billion by 2027.
A similar expansion of inventory moving robots
could be coming to brick and mortar retailers.
I would envision the move category, thinking about
moving products within commercial spaces is on a
horizon, I believe, within the next 5 to 10 years.
Because those associates walk all day long picking
orders for our members.
Well, if we could find a more efficient way to
actually bring the inventory to them or bring
the order to them and then they can just, you know, get
it ready for the member, we'll be faster, we'll be
quicker. We might even be more accurate.
Brain Corp rolled out its autonomous delivery tug in
2020 to move inventory from the warehouse to the store
shelf. However, the company found the robot in its
current form was too large for many retail environments
and said further development was needed.
It's not mature and it's still emerging within the
public space for move.
So we've done some prototypes and some testing
and piloting with with tug product or with move
products within those spaces.
I'll say that we're ready to move into that space and
capture that market with partners as it sort of
emerges.
Everything is the biggest challenge in robotics
because everything about it is hard from the hardware to
the motor control to working with the sensors to
making everything reliable.
Despite those headwinds, robots could soon be a
common sight at grocery stores and big box chains
nationwide.
The ability to now have a robot simply roll down that
aisle and collect that information on an hourly
basis or even just a nightly basis is an enormous
benefit to retailers who really do need that
information.
What robots can bring to the table is just consistency.
They will run every day.
They will run up and down all the aisles.
They don't miss things by accident.
In general, retailers are trying to become more
sophisticated about tasks that they use people for and
instead turned to robots that often can do these jobs
more efficiently at a lower cost.
And that may mean people are doing different jobs or
that may mean that there are not roles for as many
people.