How Retail Robots Lower Stockouts and Labor Cost

Optimus Primates Converge the Digital and Physical Shopping Experience

According to IHL, overstocks and out-of-stocks (aka inventory distortion) cost global retailers $450 billion annually, or $252 billion just in North America. That later amount equates to the annual revenues of Home Depot, Kroger and Target combined.

Retailers rely on automated technologies such as supply chain systems to measure what comes in from the truck and POS systems to measure what goes out with consumers. However, as most consumers find out the hard way, what's reported to be in the store and what can actually be found on the shelves can be quite different. IHL research reports that out-of-stock levels are often 3 to 4 times more than reported.

Why the difference? Several factors, such as shrink, ineffective product placement, inaccessible or misplaced merchandise, or goods that simply are not found at the point of decision.

When consumers cannot find what they came for it exacerbates negative consumer experiences and results in lost retailer revenues. Fortunately, achieving even small reductions in stock-outs can deliver big improvements in customer experience and store revenues.

Meet Tally

Simbe Robotics is becoming a niche leader in service based robotics solutions that perform automated shelf auditing for retailers.

The company's name sake is derived from 'simulated being' and the retail robot is designed for those dull and mundane tasks that often get short rift. For example, small format stores generally allocate around 25 hours per week to auditing shelves.

However, any retail manager knows that competing priorities often lessen this investment, which then contributes to increased stock-outs. With Tally, the company advises that this weekly allocation can be reduced to 30 minutes and at the same time deliver near continuous and accurate inventory availability.

I had a conversation today with Simbe Robotics co-founder and CEO Brad Bogolea. He shared that Tally's operation is based on vision and not RFID or other tagging technologies. While roaming, Tally takes high definition pictures and compares them to planograms. The planograms contain meta data and Tally's pattern matching recognition delivers the merchandise and shelf availability reporting.

Tally analytics include out of stocks, empty spacing, misplaced items and improperly priced items (by comparing merchandise to shelf tags). When rolling up the data a category manager can see how shelf availability effects revenues across stores and impacts overall company revenues.

The primary target market is fast moving consumer goods such as small format stores, mass merchants and department stores. However, it is easy to see how CPG companies can use this technology for their retail shelves auditing and analysis as well.

It's still early days for retail robots, but I suspect a retail technology that can reduce labor and out of stocks and consequently lead to improved customer experiences and increased store revenues has a promising future.