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I. Introduction and Summary

Robots are increasingly being deployed in retail environments.

1 The reasons for this include: to re-

lieve staff from the performance of repetitive and mundane tasks; to reallocate staff to more value-added, customer-facing activities; to realize operational improvements; and, to utilize real-time in-store generated data. Due to the impact of the 2020 Coronavirus outbreak, we can now add a new reason to use robots in retail: to assist with customer and employee safety. In this Research Article, we present information on the benefits associated with deploying robots in stores. Estimates of the size of the global retail robot market are advanced. The impact on demand for robots in the grocery industry, in light of the Coronavirus outbreak, is discussed as well. This is followed by a review of U.S. retail robot deployments and the advancing of some emerging applica-tions. In summary, we find that the trend toward deploying robots in retail environments is accelerating.

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The reasons for this include their functional utility, advances in AI, and the ability to address both la-bor challenges and customer and employee safety concerns. The introduction of new uses of real-time, in-store generated data is another advantage. Further, the movement toward multimodal ro-bots that are efficient at performing various functions adds to the value equation.

3 We also find that

changing consumer behavior to increase online purchases, especially in grocery, is a major impetus fueling this movement. Finally, establishing industry standards, which is ongoing, will fuel adoption. Previous impediments to adoption, which are not detailed here, are also at play. These, for the most part, include issues of cost and training. The costs of robots will decrease, and the ROI will greatly increase, as complex computing moves off the payload via 5G and sensor costs continue to de-crease. Increased vendor competition will also be a factor. The cost and complexity associated with environmental training are also being addressed via the introduction of synthetic data.

1 See, i.e., “Grocery stores turn to robots during the coronavirus,” available at: https://www.cnn.com/2020/04/07/business/grocery- stores-robots-automation/index.html; “How COVID-19 could accelerate the use of robots in retail,” available at: https:/ techwireasia.com/2020/04/how-covid-19-could-accelerate-the-use-of-robots-in-retail; and “Coronavirus crisis could prompt Amazon, other retailers to invest in automation,” available at: https://www.spglobal.com/marketintelligence/en/news-insights/latest-news headlines/coronavirus-crisis-could-prompt-amazon-other-retailers-to-invest-in-automation-57902598. 2 See, i.e., “Calling all robots: businesses automate the battle against coronavirus,” Wall Street Journal, April 6, 2020. 3 For example, robots that can perform shelf-audit and RFID functions simultaneously; robots that perform both shelf-audit and spill/ hazard detection functions; and, robots that are capable of undertaking spill/hazard detection by day and disinfecting functions at night.

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II. Benefits and Estimates of Industry Size At the outset, retail robots offer significant potential cost benefits. For example, McKinsey & Compa-ny estimates that various technologies, such as in-store labor automation and robotics operating simultaneously, can potentially add two to four percent to a retailer’s profitability (see Chart 1).

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Chart 1.

Source: McKinsey & Company

It has also been found that “[r]obots are rapidly making inroads in the retail sector. They have been shown to reduce manpower requirements, improve efficiency, reduce costs, and speed-up deliver-ies. As applications grow and the technologies mature, retail is expected to become a major robot user and will offer significant business opportunities.”

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On the end-user side, retailers have been reluctant to share insights into the benefits associated with deploying robots in their stores. This may be attributed to trying to maintain a competitive advantage, on the one hand, while they harbor concerns over employee fear of job losses, on the other. Some anecdotal information retrieved follows: • Walmart’s Alphabot: Collects 800 products per hour for online order fulfillment from a workstation

versus a store worker, which can collect around 80 products from store shelves an hour.6

• Walmart’s FAST Unloaders: Cuts the number of workers needed to unload trucks by half, from about eight to four workers.

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• Walmart’s Auto-S shelf-audit: The robots are “50 percent more productive than their human counterparts and can scan shelves significantly more accurately and three times faster … [s]tore employees only have time to scan shelves about twice a week.”

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• Schnuck’s Market and Giant Eagle: Shelf-audit robots ” … can check 15,000 to 30,000 products per hour.”

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4 “A transformation in store,” McKinsey & Company, May 2019. 5 “Strong prospects for robots in retail,” Industrial Robot: The International Journal of Robotics Research and Application, February 2019. 6 “Welcome to Walmart. The robot will grab your groceries,” Wall Street Journal, January 8, 2020. 7 “Robots bolster the Walmart workforce,” The Australian, April 11, 2019. 8 “Walmart's new robots scan shelves to restock items faster,” Reuters, October 26, 2017. 9 “How robots are helping grocery stores during the coronavirus outbreak,” Forbes, March 30, 2020.

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• Ahold Delhaize partnered with the Delft University of Technology in the Netherlands to fund a ro-botics research program that will develop and test innovations.

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• Brain Corp., a provider of autonomous floor cleaners, reported on January 23, 2020, that it “achieved more than a 300 percent increase in revenue last year, fueled by a surge in in-terest for BrainOS-powered floor care machines by major retailers, including Walmart. ”

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As the industry is still in its infancy, there are minimal reliable studies regarding market size. Esti-mates range from $4.8 billion to $19 billion in the 2015 to 2018 time frame, to as much as $52 billion by 2025. In April 2018, Bekryl Market Analysts published its Global Retail Robots Market Size Analysis, 2018-2028. Bekryl estimates the global retail robot market at $19 billion in 2018 (see Chart 2). They further estimate that the market will grow at a CAGR of 12.7 percent over the next ten years. Now consider a different perspective. Verified Market Research valued the global retail robotics market at $4.78 billion in 2018, but expects a much more rapid rate of growth of 31.89 percent from 2019-2026, reaching $41.67 billion by 2026.

12 In 2016, yet another point of view was advanced by consult-

ing firm Roland Berger, which stated “[t]he segment of robots designed for retail stores is emerging in a global robotics market that is already significant ($19 billion in 2015) and growing steadily ($52 billion in 2025).”

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Chart 2.

10 “Ahold Delhaize invests in robotics research,” Grocery Dive, November 12, 2018. 11 Available at: https://www.braincorp.com/newsroom/brain-corp-achieves-record-sales-growth-in-2019-amid-strong-retailer-demand- for-autonomous-mobile-robots. 12 The reader should note that we are unable to opine on the accuracy of this information. 13 “Robots and retail – what does the future hold for people and robots in the stores of tomorrow?” available at:

https://www.rolandberger.com/it/Publications/Robots-et-Retail.html.

Global Retail Robots Market (US$ Bn), 2018-2018

Source: Bekryl Market Analysts.

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III. Coronavirus Impact on the Demand for Robots in Grocery The Coronavirus outbreak will cause more grocery retailers to ramp up their investment in robotics. This is principally attributable to consumers eating at home more, which is fueling the surging de-mand for online orders to be fulfilled by delivery and store pickup. This represents a significant change in the way grocers transact, because online purchases in the segment have been lagging. Grocery Sales Remain Robust Retail sales tumbled in March 2020, down 8.3 percent from February and 5.7 percent versus March 2019. April was far worse, with sales down 16.4 percent versus March, and 21.6 percent versus April 2019 (see Chart 3). Chart 3. Advance Real Retail and Food Services Sales

Grocery store sales, on the other hand, rose by 28.6 percent in March. And while they dropped by 13.2 percent in April, much of this can be attributed to consumer panic buying and stockpiling in March. Notwithstanding, as consumers stay home, grocery stores have and will continue to benefit. As the current Coronavirus pandemic constrains consumers' ability to shop in stores, there is ample evidence that a shift to online purchasing is occurring (see Charts 4a and 4b) in select categories, particularly grocery. To realize operating efficiencies while meeting this increased demand, grocery retailers, which represent the largest segment currently invested in robotics technology, are ex-pected to accelerate their rate of investment. Chart 4a. Change in E-Commerce Usage to Purchase Products Normally Bought In-Store due to Coronavirus in the U.S. as of March 15, 2020

Source: U.S. Census Bureau.

Source: Ipsos; Statista.

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Chart 4b.

Online Grocery Sales to Expand Rapidly

While the increase in retail e-commerce sales as a percentage of overall retail sales has been stead-

ily growing, grocery stores have not been keeping pace. At the end of the third quarter of 2019, 11.2

percent of all retail sales occurred online (see Chart 5). By the fourth quarter of 2019, it reached 11.4

percent (16.7 percent quarter-over-quarter).

Chart 5. E-Commerce Retail Sales as a Percentage of Total Sales

Source: Coresight Research; eMarketer.

Source: U.S. Census Bureau.

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14 To put this $45 billion into perspective, Progressive Grocer’s 2020 ranking of leading food and consumables retailers notes that the eleventh largest in the U.S., Ahold Delhaize, had revenue of $44.8 billion with 1,973 stores; Kroger, the third largest, had revenue of $122 billion with 2,757 stores.

In contrast, online grocery sales have been growing only incrementally. In 2019, online grocery

spending was estimated to account for 6.3 percent ($54.6 billion) of total U.S. grocery spending (see

Charts 6a and 6b). Estimates of growth vary considerably, from as low as 8.2 percent (see Chart

6a), to as much as 38 percent by 2022 (see Chart 6c). To exemplify the significance of this, if online

grocery sales were to come close to matching the 11.4 percent overall retail online spending level in

2019 due to changing consumer behavior over the next few years, that could represent a shift of an

additional $45 billion to online ($99.6 billion total).14

While this 11.4 percent rate of penetration is pre-

sented here just to demonstrate the possible implications resulting from a substantial shift in pur-

chasing behavior, what is clear is that consumers are currently buying more groceries online, as

demonstrated below.

Chart 6a.

Chart 6b.

Source: Brick Meets Click.

Source: Brick Meets Click.

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Chart 6c.

Survey data provides support for the position that a shift to online grocery purchasing is occurring.

Chart 7a illustrates that an increase in the reported use of grocery delivery services rose from 17

percent during the first week of March to 27 percent by the last week of April. The same poll found

that the rate of use of such services will become common, increasing from 15 to 19 percent. Re-

spondents also felt that the use of such services will become prevalent, increasing from 36 to 46

percent (see Chart 7b).

Year-over-year increases in online food sales are estimated to have increased by as much as 200

percent in March and 230 percent in April (see Chart 8). A different study found that more than half

(54.3 percent) of U.S. adults spent more on online grocery shopping while quarantined (see Chart

9), with as many as 61 percent of consumers having recently purchased groceries online (see Chart

10).

Chart 7a.

Source: UBS.

Source: CivicScience.

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Chart 7b.

Chart 8.

Source: CivicScience.

Source: NetElixir.

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Chart 9.

Chart 10.

The pressing question is whether this current movement to online grocery purchases during the pan-

demic represents a more permanent shift in consumer behavior. Consumers seem to think so. For

example, in an April 2020 survey, 43 percent of adults said they were somewhat or very likely to

continue ordering groceries online once the pandemic ends (see Chart 11). McKinsey & Company’s

COVID-19 U.S. Digital Sentiment Survey found that fully “75 percent of people using digital channels

for the first time indicate that they will continue to use them when things return to normal.”

Source: Business Insider Intelligence; eMarketer.

Source: McKinsey & Company.

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15 “Ahold Delhaize sketches out Covid-19 investment plan,” Supermarket News, May 8, 2020. 16 Kroger and Ocado Group Plc announced in July 2019 plans to build as many as 20 automated grocery warehouses in the U.S. 17 In its report, “Automation in retail: An executive overview for getting ready,” May 2019, McKinsey & Company notes that technolo-

gies, such as shelf-scanning robots, “have been proved at scale and offer internal rates of return higher than historical retail hurdle rates—yet few retailers are moving quickly to implementation.”

18 “Sign of the times: Walmart to hire robots for the holidays,” Material Handing & Logistics, October 30, 2017.

Chart 11.

In the final analysis, once current health fears abate, a continued consumer shift to purchasing gro-

ceries online will depend on the quality of the service and the perceived value offered. As discussed

above, consumer demand tends to support their intent to buy more groceries online, and retailers

confirm this shift in buying behavior. Specifically, in May 2020, grocer Ahold Delhaize reported that

global online sales rose 38.6 percent. In the U.S., first-quarter online sales advanced by 42.8 per-

cent, and it raised its online sales growth forecast to increase from 30 percent to 50 percent for

2020.15

Also in May, Walmart reported U.S. online sales grew by 74 percent during the first quarter,

with strong results for grocery pickup and delivery services. Major investments being made by firms

such as Kroger16

and Walmart demonstrate that they believe they can meet this challenge by invest-

ing in automation, including robots.

IV. Current Applications

Robots are currently being deployed in many retail environments. In this section, we highlight the

eight most prevalent applications.

1. Shelf-audit: To aid in inventory management and price label compliance, these robots autono-

mously scan store shelves to determine that the correct price is displayed, that merchandise is

placed in the correct location, and to call out missing shelf-facings (out-of-stocks) for replenish-

ment.17

It has been noted that robots are more productive than staff, as they can scan shelves more

accurately and faster than human employees.18

Source: The Harris Poll; eMarketer.

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2. Autonomous floor cleaners.

3. Spill/hazard detection: Robots that circulate in a store to detect spills and other hazards, and alert employees if a clean-up is required. Some of these robots also perform shelf-audit functions.

Source: Badger Technologies.

Source: Brain Corp.

Source: Zebra Technologies Corporation. Source: Badger Technologies.

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4. RFID: Robots outfitted with RFID antennas to aid in both counting and locating merchandise. Un-like shelf-audit robots, those with RFID can track inventory levels to increase inventory accuracy. Some of these robots can simultaneously perform shelf-audit functions as well.

5. Backroom/warehouse operations: Includes robots that move products to people to increase pick speeds and reduce human movement required for fulfillment.

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19 The warehouse automation market, which would include those operated by retailers, is estimated to grow from $13 billion in 2018 to $27 billion by 2025, at a CAGR of 11.7 percent between 2019 and 2025 according to LogisticsIQ.

Source: Amazon Robotics.

Source: Simbe Robotics.

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6. Customer service: Robots that greet customers and provide product and service information.

7. Delivery: Robots that deliver products to consumers.

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20 Introduced in 2014, it is estimated that there are more than 20,000 Softbank Robotics Pepper robots deployed globally. 21 Delivery robots are being widely tested, see, i.e., “The scramble for delivery robots is on and startups can barely keep up,” Wall

Street Journal, April 25, 2020. Several retailers have announced testing of delivery robots, including Walmart in December 2019, Domino’s Pizza in June 2019, and Kroger in August 2018. It is noteworthy that drone delivery services are also advancing. For example, UPS announced in April 2020 that it will be delivering CVS prescriptions in Florida using drones (see: https://www.businessinsider.com/ups-deliver-cvs-prescription-medications-by-drone-the-villages-2020-4).

Source: Softbank.20

Source: Nuro.

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8. Online order assembly: Automated systems that include wheeled robots carrying baskets to collect the product.

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22 In addition to Walmart, robotic fulfillment systems of various types are being deployed/tested at Albertsons, Wakefern Food, Loblaw Cos., Ahold Delhaize, Sedano’s Supermarket, Big Y, and Kroger.

Source: Starship Technologies.

Source: Walmart. Source: Takeoff Technologies.

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V. Retail Deployments In this Section, we discuss the type of robots being implemented by various retailers, as well as the number of units being deployed. Walmart

Walmart is arguably the most advanced retailer in terms of robot testing and deployments. These include: Auto-C, an autonomous floor scrubber. Walmart plans to deploy 1,860 units.

Auto-S, autonomous shelf-audit robots. Walmart plans to deploy 1,000 units. Alphabot, online order assembly. The Alphabot operates in a 20,000 square-foot facility attached to a store. The Alphabot robots move vertically and horizontally, transferring thousands of blue bins around the shelving system as they pack orders. The system is currently deployed in four stores.

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Source: Walmart.

23 See video at: https://corporate.walmart.com/newsroom/videos/b-roll-alphabots-in-use.

Source: The Robot Report.

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FAST Unloaders work in combination with Auto-S to automatically scan and sort items unloaded from trucks based on priority and department by ordering which items get moved to the sales floor.

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These unloaders ensure what was received at a store is consistent with warehouse invoices as well. Walmart plans to deploy 1,700 units.

Pick-Up Towers have a robotic mechanism inside to find products in the 16-foot tower to bring it down to the customer pick-up window. Walmart plans to deploy 1,700 units.

25 A stand-alone, robot-

assisted version outside of a store is also found in Tulsa, Oklahoma.

Ahold Delhaize (The Giant Company and Stop & Shop)

Spill/hazard detection robots are currently operating in 506 supermarkets in Connecticut, Maryland, Massachusetts, New York, Pennsylvania, Rhode Island, Virginia, and West Virginia. Amazon

Backroom/warehouse: Over 150,00026

robots in its warehouses move items to a worker for pick and pack.

24 While not a robot, we note the FAST Unloaders here as it is an interesting example of how information generated from a shelf-audit robot is used to enhance operations.

25 See video at: https://www.youtube.com/watch?v=71pgd-LzzXc. 26 Asian Robotics Review, available at: https://asianroboticsreview.com/home297-html.

Source: Walmart.

Source: Walmart. Source: Walmart.

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Schnuck Markets

Shelf-audit robots are deployed in twenty percent of its stores. HSBC Bank

Customer service: In March 2019, HSBC Bank USA and SoftBank Robotics America announced that they would be rolling out Pepper robots to HSBC branches nationwide, starting with its Beverly Hills, California location. Microsoft

Customer service: Deployments in various retail stores. Giant Eagle

Spill/hazard detection: Testing in three stores. Shelf-audit: In three of its largest markets. Decathlon Sports

Shelf-audit and RFID: Currently deployed in its U.S. stores.

VI. Emerging Applications

The application of robots to address other retail operating issues continues to evolve. Those focused on customer and employee safety are progressing rapidly. Several others worth watching are also presented here. 1. Customer and employee safety: Applications include robots that disinfect environments, monitor customer and employee temperatures and warn of risks, ensure safe distancing, and scan for the wearing of facemasks. Security and pharmacy dispensing robots are other interesting use cases. While these types of robots are not currently being deployed in the U.S., it is believed that those that disinfect environments will be soon. As stores begin to reopen, keeping customers and employees safe is of critical concern. The Nation-al Retail Federation and Industry Leaders Association have published guidelines to help retailers in this regard.

27 Social distancing, wearing protective face coverings, sanitization, and health screen-

Source: Fortune.

27 See: “Blueprint for shopping safe,” available at: https://rilastagemedia.blob.core.windows.net/rila-web/rila.web/media/media/pdfs/committee%20documents/coronavirus%20documents/final-reopen-retail-blueprint-rila-nrf.pdf.

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ings are among the suggested protocols. According to futurist Martin Ford, "[p]eople will prefer to go to a place that has fewer workers and more machines because they feel they can lower overall risk."

28 That makes sense, but barriers remain to deploying robots to address some of these con-

cerns. In countries such as China, where robots are currently being deployed to scan temperatures and de-tect if face masks are being worn, privacy is not an issue. In the U.S., on the other hand, privacy concerns may represent a significant barrier to adoption. Thus, the overriding concern is, will cus-tomers be willing to make the tradeoff between safety and privacy?

29 Resolving this is a central re-

quirement before these robots will be deployed in the U.S. Disinfection robots, on the other hand, appear to be a promising application. Hospitals and hotels are adopting this technology.

30 “Instead of manual disinfection, which requires workforce mobiliza-

tion and increases exposure risk to cleaning personnel, autonomous or remote-controlled disinfec-tion robots could lead to cost-effective, fast, and effective disinfection.”

31 Amazon, for example, is de-

veloping a robot that would roll through grocery stores and distribution centers, using banks of ultra-violet light to kill viruses on surfaces, but the company would not detail its timeline for a rollout.

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One noteworthy limitation of disinfecting robots that use ultraviolet light to kill viruses is that they cannot be used when individuals are present. Thus, in a store that is filled with restocking labor in the evening, this may present a challenge. But the operation can be scheduled to be performed at a specific time and place when no one is present. According to one source, a disinfecting robot can be deployed “at a fraction of the cost of employees manually cleaning or disinfection contractors de-ploying chemicals.”

28 “Coronavirus: will covid-19 speed up the use of robots to replace human workers?” BBC News, April 19, 2020. 29 And in certain states that have strict laws regarding the use of biometrics, such as Illinois, it may not even be a consumer choice, as

deployment itself could risk fines. 30 According to Xenex, which manufactures a UV germ-zapping robot to eliminate harmful bacteria and viruses, business is up sub-

stantially. Available at: https://news.crunchbase.com/news/hospital-disinfecting-robots-xenex-sees-surge-in-orders-as-covid-19-pandemic-escalates.

31 See, generally: “Combating COVID-19—The role of robotics in managing public health and infectious diseases,” Science Robotics, March 25, 2020.

32 See: “60 Minutes shows Amazon’s virus-killing robot; says company uses AI to enforce social distancing,” GeekWire, May 10, 2020.

Source: CloudMinds Technology (functions include non-

contact temperature monitoring, warning, and detection).

Source: UBTech (functions include non-contact temperature meas-

urement, mask detection, auto disinfection, environmental status

reporting, telepresence, and other data collection).

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2. Product inspection and display: Ensuring product freshness and that adequate levels of the prod-uct are displayed is a rapidly advancing new robot application. Products can be inspected for fresh-ness at a distribution center, store, and/or before in-store placement. The picture below shows the application of hyperspectral imaging to determine the age of a strawberry.

33 This ensures that prod-

uct meets quality standards. In addition, robots are being trained to recognize products to ensure that adequate quantities are on display.

33 “Spectral Analysis for Food Safety,” University of Kentucky College of Engineering Institute of Research for Technology Develop-ment, presentation June 2018.

Source: Amazon; CBS (UV-emitting

robot to kill viruses on surfaces).

Source: The National Science and Tech-

nology Development Agency, Bangkok.

Source: Badger Technologies.

Source: University of Kentucky.

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3. Stocking shelves: While still emerging, robots that stock store shelves will be available in the not- too-distant future.

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4. Picking for online order fulfillment: Automated warehouse systems for online order assembly are generally more efficient than single-function robots in filling mass orders. But in certain instances, such as picking a high-value product and for in-store shelf picking to fulfill buy-online, pick up in-store orders, robots may be the answer. As with stocking shelves, this technology is still emerging, but worth tracking.

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34 “Knowledge-Enabled robotic agents for shelf replenishment in cluttered retail environments,” May 2016, available at: https:// arxiv.org/pdf/1605.04177.pdf.

35 “Mechanical search: multi-step retrieval of a target object occluded by clutter,” March 2019, available at: https://arxiv.org/ pdf/1903.01588.pdf.

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An example of this is the recent announcement by Ahold Delhaize that it is accelerating the develop-ment of robotic arms to both help clean stores and process orders.

VII. Conclusion

In conclusion, we see the pace of retail robot adoption accelerating, especially in the grocery seg-ment. Technology advancements surrounding deployments in stores, backroom/warehouses, and delivery applications will continue to improve. Deployment costs will fall, as will the time to deploy, which will increase ROI, as will multi-functional payloads that perform a variety of tasks. Emerging innovations will add interesting new use cases. Increasing uses of real-time data generated, and the application/integration thereof, will also create additional value. Finally, ongoing efforts to establish industry standards will aid in industry adoption.

Source: Wall Street Journal; Photo: Airlab/Corrado Pezzato.