Finance in Retail
Customer Footfall Analysis
February 12, 2025
The concept of in-store automation is increasingly becoming popular in the retail sector. In the previous articles, we have already seen what in store automation is.
We are now also aware of the various advantages which result from in store automation. However, it would be incorrect to assume that in store automation does not have any challenges or issues.
Just like any other technology, in store automation is also replete with disadvantages. These disadvantages need to be understood and analysed in detail. It is only when the industry stalwarts will be able to address these concerns that in-store automation will be implemented on a large scale. Right now, only a few retailers in high income countries are able to deploy in-store automation at a significant scale.
Some of the common disadvantages which are associated with in-store automation are as follows.
- Operational Complexity: First and foremost, a high degree of automation is associated with a high degree of operational complexity. This is because managing a technology-based retail store is quite different from managing a regular retail store. As a result, employees need to have a different skill set. It is difficult to find and recruit employees which do have these skill sets since people who are well versed with technology generally do not find jobs in the retail sector to be appealing. Training employees can be cumbersome as well as expensive and still may not yield the desired results.
- Customers not well versed with Technologies: It is not just the employees which struggle when retail stores are automated.
There are many customers which find it difficult to shop at stores where extensive automation has taken place. This is because many customers may not be tech savvy and hence may not be familiar with technologies such as self-checkout systems which are commonly used in retail stores.
Also, many customers belonging to the older generation may not be well versed with credit cards or other digital modes of payment which are commonly associated with in-store automation.
- Consumer Trust: There are some customers who are tech savvy enough to use the automated systems deployed at retail stores. However, they are still not comfortable doing so. This is because many retail stores retain personal customer data such as their credit card details, their shopping details and their financial information.
Many customers are not sure about whether retail organizations have adequate data security mechanisms in place to prevent their data from being leaked or misused. Developing customer trust is not easy and hence in many parts of the world customers are still hesitant when it comes to sharing their personal data.
- Privacy Issues: In many parts of the world, privacy concerns have been raised about the data being collected by retail organizations. This is because many high-tech retail giants are collecting data such as facial recognition data when they try to automate their stores.
There are several customers around the world who may not want their facial data to be captured. The problem is that when customers enter the retail store, they are immediately subject to the scrutiny of the systems which have deployed.
Customers do not have the option of opting out from the process. As a result, there have been lawsuits filed in many countries and retailers have had to cut down the degree of automation in their stores. Retailers need to be mindful about the customer’s right to privacy and cannot build systems keeping only their operational efficiency in mind.
- Lack of Human Interaction: Many retail customers tend to prefer the human touch which offline brick and mortar retail stores have to offer. They prefer to have contact with a human being who assists them in making their choice. This personal touch has been the unique selling proposition for many stores, particularly the ones that sell high margin goods.
It is for this reason that the lack of human interaction which in-store automation brings along is resented by many loyal customers. In many instances, the implementation of automation has led to a change in the customer base. Retail stores tend to see sales from order customers decline and younger customers increase as and when they switch towards more automation.
- Debt Trap: There are several customers who believe that with the increasing use of automation, retailers are able to profile them by augmenting their personal data. They are then using this data to create tempting offers. The end result is that customers end up buying more and more.
Retailers also create attractive payment schemes, many of which are designed in such a way that they keep customers indebted for a long time. This is the reason that customer advocacy groups around the world have shown resentment towards increasing automation in retail stores.
Hence, it is important to note that there is no clear consensus amongst the consumer community when it comes to automation relating to the retail sector. There are many consumers who are excited about the pros that it has to offer. On the other hand, there are many other consumers who are fixated on the cons. The fact of the matter is that consumers want some pressing issues such as privacy and consent addressed before in-store automation can proliferate more and become industry standard.