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.
