This story is the third in a series on key trends affecting grocers in 2022.

In response to persistent labor shortages—which have severely tested retailers' ability to keep stores staffed and shelves stocked—grocers are stepping up efforts to mechanize a range of key tasks traditionally handled by humans.

This includes adding more self-checkout terminals in stores and relying on automated tools that help update prices and manage inventory. Many of these tools have long been available to food retailers, and they are now receiving more attention as the industry faces seemingly long-term hiring and retention challenges.

However, industry experts say that as retailers increase their reliance on proven automation solutions, they are also grappling with pressing questions about how human roles will be positioned in the supermarket of the future.

Gautham Vadakkepatt, director of the Center for Retail Transformation at George Mason University's School of Business, noted that having employees perform tasks that technology can easily replace may not be the best use of human time. He said, "Companies are becoming smarter and realizing that, given the new environment we're in, let's use automation for these tasks and deploy our talent to roles that truly add value to the company."

Vadakkepatt said automation may save retailers costs and speed up customer checkout, but human involvement still plays a key role in ensuring the shopping experience is satisfying for customers. He said, "Humans are naturally equipped with problem-solving and issue-handling abilities, and that's where we'll see human labor deployed."

"I think the labor shortage is pushing us toward the future, and grocers are wisely viewing this as a growth opportunity."

—Henry Michaelson, co-founder, president, and CTO of Halla

Retailers' balancing act

Henry Michaelson, co-founder, president, and CTO of Halla, which provides personalization technology to retailers, said the hiring and retention challenges facing retailers are giving them compelling reasons to embrace technology in ways they may not have before.

Michaelson said, "I think the labor shortage is pushing us toward the future, and grocers are wisely viewing this as a growth opportunity."

Neil Stern, CEO of West Coast supermarket chain Good Food Holdings, said retailers are facing a complex balancing act as they navigate the industry's labor crisis. He said, "We have physical stores, customers coming in, and shelves that need to be stocked. In the current challenging environment due to the pandemic, I still need employees to come to work."

Good Food operates about 50 supermarkets under brands including Bristol Farms, Metropolitan Market, and New Seasons Market. Stern said the company is significantly increasing its use of technology to maintain operations. Self-checkout is a particular focus for the company because it helps speed up customer flow.

Stern said, "It's not just about saving labor at the front end for retailers; it's actually the checkout method customers prefer." He mentioned that Good Food has one employee monitoring every four self-checkout machines.

Reflecting customers' emphasis on convenience, in a December survey by mobile data company Anyline, more than three-quarters of consumers said they would be more likely to shop at a store if it offered scan-and-go checkout technology. Anyline co-founder and CEO Lukas Kinigadner said the company is developing technology that allows customers using scan-and-go systems to purchase age-restricted items like alcohol without interacting with store staff.

Stern said customers are increasingly inclined to complete their shopping quickly, a trend that in many cases makes people value automation more. This focus is especially evident at food service counters, where customers sometimes have to wait in line, so Good Food is installing self-order kiosks for sandwiches to speed things up.

Stern said, "You could say 'what wonderful interaction we're providing,' but I think customers are also saying 'there must be a better way. If I want a sandwich, I'll order through an app or kiosk and just pick it up.'"

According to Stern, Good Food will also test smart shopping carts with Veeve in some stores this year, a technology that uses computer vision to record items as customers take them off shelves. The retailer also plans to pilot electronic shelf labels in 2022.

Stern said that while electronic shelf labels help save labor costs due to reduced maintenance work, they alone are not enough to provide a substantial return on investment. But when digital price displays are used to support dynamic pricing, their appeal greatly increases. He said, "I think many retailers will focus on this important use case."

Stern also said Good Food is looking into automated inventory tracking technologies like aisle-scanning robots from Simbe Robotics, but has not yet decided whether to move forward.

Wholesalers that have faced hiring and retention difficulties during the pandemic are also embracing automation in more areas, said Marco Di Marino, director of the retail and grocery division at consulting firm AlixPartners, citing robots that efficiently stack products on pallets. He said, "When robots stack goods, they do it better."

The tight labor market is also prompting retailers to seek ways to improve e-commerce efficiency, especially order fulfillment speed. Neil Moses, CEO of Wynshop, which provides e-commerce technology to retailers, commented via email that in research Wynshop conducted with research firm Incisiv in 2021, nearly 80% of grocers ranked "improving picking efficiency" as their top way to boost profitability.

Mike LaVitola, co-founder and CEO of convenience store chain Foxtrot, said he is looking to use technology that handles repetitive tasks like cashiering to enhance the company's ability to offer differentiated products. Foxtrot is investing heavily in technology, including testing computer vision-based frictionless checkout in several stores, while also working to strengthen capabilities like inventory management and personalization.

LaVitola hopes Foxtrot employees can focus as much as possible on the curated product assortment, which includes many locally sourced and private-label items. He said, "Think about our stores—every item on the shelf has been tested and discussed... so there's a story behind all the products. That's what we want our in-store team to focus on."

Recognizing technology's limits

Saibal Ray, academic director of the Bensadoun School of Retail Management at McGill University in Canada, said that while rapidly rising labor costs combined with rapid advances in areas like artificial intelligence and computer vision are creating favorable conditions for retailers to embrace innovation, they also raise questions about what level of automation makes sense for grocers.

Ray said, "From an economic standpoint, more automation to some degree will increasingly make sense," because technology costs are falling while retailers have to offer higher pay to attract and retain employees.

At the same time, self-checkout terminals, smartphone-based ordering facilities, and technologies that automatically record purchases may, while retailers try to eliminate friction, actually add shopping barriers and frustrate customers. Ray noted, for example, that requiring customers to download an app or set up an account to make a purchase could reduce shopping convenience and drive customers away. Additionally, self-checkout systems bring benefits to retailers but may also make customers feel dissatisfied for taking on work previously done by staff.

Ray said, "Consumers take on the work at self-checkout, and they ask 'what do I get out of this? Is the price lower?'"

LaVitola also believes over-reliance on technology could undermine the consumer retail experience. He said, "We have to be very careful not to just pile on a bunch of technology... but rather let technology quietly fade into the background to create a better experience for employees and customers."

David Gottlieb, chief revenue officer of Trax, which provides computer vision services to retailers, said that beyond helping retailers manage operations with fewer people, technology can also attract potential employees by adding excitement to retail roles. He said, "When considering these next-generation technologies, there's certainly an opportunity to bring benefits not just to the entire store—because you lower costs and improve product availability—but also to employees and their retention, because now you've given them a cool tech tool to use."

Jeff Wells contributed to this article.