Fourth Industrial Revolution

In the future your sales assistant could be a robot

Humanoid robot of British company RoboThespian "blushes" during the opening ceremony of the Hanover technology fair Cebit March 9, 2014, where Britain is this year's partner country.

Robots are being embraced by retailers anxious to join the tech bandwagon in a new way. Image: REUTERS/Wolfgang Rattay

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This fall, customers cruising the aisles of Lowe’s home improvement stores in the San Francisco Bay Area may see a new type of employee taking inventory and assisting shoppers. You won’t find a nametag on this worker, but you won’t confuse it with other employees, either. The new kid in town is the LoweBot, an autonomous retail service robot that scans and audits store inventory on the floor. It uses voice recognition to identify products for customers and lead them to the right shelf — in multiple languages.

The retailer is deploying LoweBots at 11 of its Bay Area stores over a seven-month period using NAVii robots made by Fellow Robots, following a successful two-year pilot program of a first-generation robot called OSHbot that was tested at one of Lowe’s Orchard Supply Hardware stores.

Lowe’s isn’t the only store where you could come face-to-face with a robot in aisle 10: Target is using inventory taker Tally, created by Simbe Robotics, and electronics chain Best Buy is trying out customer service robot Chloe, created jointly with PaR Systems, according to a CNBC report. Meanwhile, SoftBank plans to launch Pepper, its humanoid, voice-recognition customer service robot, in U.S. retail stores later this year.

While robots have been used behind the scenes in retail for years, Lowe’s and other retailers are now putting them on the retail floor. “Robot use will probably grow” as long as it brings value to the customer, predicts Denise Dahlhoff, research director at Wharton’s Baker Retailing Center. Retail robots promise to bring cost savings, enhanced productivity and greater efficiencies while improving the customer experience at the same time.

“Many retailers have a customer service issue with employees, who are either not trained or knowledgeable about the products in the store and where consumers can find what they are looking for,” says Stephen Hoch, Wharton professor emeritus of marketing. “This is especially the case with big box stores, where consumers expect the stores to have experts if they specialize and provide a big assortment of just a few categories.”

Robots also don’t push consumers to buy something the way an over-eager sales person might. “Not everyone is comfortable being helped by sales people. They may be suspicious of their advice,” says Wharton management professor Peter Cappelli, who is also director of the school’s Center for Human Resources. “Some of that goes away with electronic help.”

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25 Hours vs. 30 Minutes

Robots are being embraced by retailers anxious to join the tech bandwagon in a new way. Tally was tested by three Fortune 500 companies and two consumer goods firms; it also has generated interest from over 150 global retailers. The robot is already beyond the trial stage with some customers, but maker Simbe Robotics is not at liberty to disclose the names of those customers, according to CEO and co-founder Brad Bogolea.

Based on Simbe’s field test work to date, Tally is approximately 96% accurate when it uses computer vision to take pictures of the items on store shelves and compare it to the store diagram of what and where the items should be situated. Discrepancies between what should be on the shelves and what’s actually there are reported to Simbe’s backend software program, loaded into the cloud and shared with the retailer. Bogolea says that a human worker has about a 65% accuracy rate and it would take that worker 25 hours to do inventory, verses 30 minutes for Tally.

Both Simbe’s Tally and Fellow Robots’ NAVii robots have seen growing interest from the industry. “When we started deploying OSHbot in 2014, we were very fortunate to have a lot of interest from more retailers in our robot platform, and we are very excited to have great partners like Lowe’s to work on this together,” Fellow Robots CEO Marco Mascorro says in an interview.

In assessing future demand, Mascorro notes that “it is hard to say at this point, but we are seeing an interesting inflection point where robot technologies are solving the biggest challenges for our customers. E-commerce is a growing industry, but most of the sales still happen in offline stores, and we are helping our customers in the best ways to improve and optimize their systems and processes.”

Still, many retailers find the leap from testing to actual adoption a bit daunting because the concept is so new. “In our case, retailers have never seen anything like Tally before and that requires education and proof-points to demonstrate the value of our robot,” Bogolea says. “It doesn’t help that robots are typically demonized via sci-fi, but our main challenge is to get retailers comfortable with the idea of something brand-new. Fortunately, the benefits of improving the store’s auditing capabilities are very substantial.”

Where robots might take longer to be accepted is in the realm of luxury goods retail, Dahlhoff says. Here, a white-glove experience is not only expected but perhaps even demanded as high-end customers want the personalized service that only specially trained human staff can provide. The shopping experience itself is part of the allure of buying a luxury item, such as being custom-fitted for a bespoke Italian suit.

Man vs. Robot

Beyond technology, retailers might balk at adopting robots due to resistance from unions on potential loss of jobs. But robotics manufacturers contend that their machines will complement the tasks of existing employees — taking over some of the more mundane and repetitive chores of inventory auditing, for example — so workers can focus on customer service.

Mascorro put it this way. “We designed the NAVii robot to make the shopping experience easier for consumers — simplifying the process of finding the product you’re looking for — while also managing the backend and keeping shelf inventory up-to-date for the retailer,” he said in a statement. “Leaving the data and simple recommendations to NAVii allows Lowe’s employees to devote their attention to the Lowe’s customer, to provide them with thoughtful advice and personalized service.”

While it is easy to see the usefulness of robots in helping customers in the store, their true value lies in the ability to improve inventory management. That’s more beneficial than the amount of money saved by replacing human staff, says Marshall Fisher, Wharton professor of operations, information and decisions. “If there is a 25% error rate on tracking merchandise on the shelf … that could mean 25% more sales if the merchandise was there,” he explains. “Having nothing on the shelf is the biggest issue for retailers.”

According to a 2015 research study by IHL Group, out-of-stock merchandise can represent $129.5 billion in lost annual sales in North America, as customers abandon an intent to purchase due to lack of products. Meanwhile, overstocks — having too many units of an item that later has to be discounted to sell — account for $123.4 billion in annual lost revenue.

A sticking point is that robots might take a while to be cost effective. The price of robots is still fairly high, so it may be more expensive for now to use a robot rather than hire an employee, says Cappelli. Moreover, using robots also increases IT costs. “Robots and IT still break down, in catastrophic ways, and they don’t adjust to unusual circumstances the way people can.”

Robots can act errantly, as in the case of a K5 security robot made by Knightscope. The 300-pound, five-foot-tall robot recently ran over a toddler’s foot while patrolling the Stanford Shopping Center in Palo Alto, California, according to CNN. The robot has 30 sensors and can navigate around people and objects safely, but it was confused by the small size of a child.

Another shortcoming is that most robots lack the ability to decipher mannerisms, human emotions, posture and body language when it comes to reading a consumer, adds Dahlhoff. Perhaps the closest robot that could fit the bill is Pepper, with its humanoid looks and ability to respond to facial expressions and tones, according to a report in The (San Jose, California)Mercury News. “There is also a big potential for a robot to perceive your emotion the wrong way, which can be frustrating for the customer,” she says.

While Hoch says he would be surprised if retailers fully embrace robots to where they become a huge deal, Dahlhoff expects retail robot use to keep gaining ground. “We’re in the early stages,” she says. The fast pace of technology will bring about exciting new developments. Retailers will keep adapting, but “it ultimately has to have some value for the customer.”

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