This article was commissioned by Brandbank, a global eCommerce service provider based in the grocery sector.
Drones and driverless trucks represent the latest phase in a centuries-long process of workforce automation in the retail industry. But are initial steps by Amazon and Walmart really the beginning of a future without delivery drivers and p&p? If so, huge changes could be on their way, with massive implications for retailers, their employees and the consumer.
Automation has changed the face of retail – and the entire world of work – several times since the industrial revolution. Factories, production lines and precision machinery transformed the manufacturing process and, in recent years, advanced computerisation has seen automation creep into areas of retail, like customer service, once seen as inherently human.
Now, the rising tide of computerisation is threatening to engulf another link in the supply chain: delivery. As it stands, huge amounts of money and manpower are spent getting goods from the supplier and to the consumer, but the advent of driverless trucks and drones could be the next seismic shift in retail operations that raises big questions about the role of human labour in the industry and the future of online shopping.
As recently as two years ago, the use of drones to deliver goods directly to consumers seemed completely outlandish. However, headline-grabbing experiments by retail and Silicon Valley giants like Amazon, Google and Walmart have completely shifted the tone of the conversation. Amazon stole the early thunder with their PrimeAir advert, which was widely laughed off as a stunt, and Google soon followed with huge investment in drone technology through ‘Project Wing’.
The critical mass of blue chip companies that are getting in on the act, including DHL and Walmart, has made the prospect of widespread drone delivery systems all the more likely, although there are still plenty of reasons why many experts are sceptical about its long-term prospects, some of which we’ll return to below.
The arrival of driverless trucks looks much more imminent. Not only has the technology been successfully tested on Germany’s Autobahns, but George Osborne also recently allocated funds to driverless truck trials in the UK in his latest budget. Proponents of the technology hope to see convoys of trucks navigating motorways under the control of on-board computers, requiring only one human driver to lead the pack, as has been demonstrated in a recent long-distance driverless trip across Europe.
Both technologies potentially threaten the existence of much of the enormous freight and courier industries, by massively reducing dependence on manned, road-based delivery. So what have these pioneering companies got against truckers? And why should the grocery industry take note?
Saving money, time and lives
Put simply, drones would bring an immediate service benefit to customers, while driverless trucks could give suppliers extraordinary efficiency and monetary savings.
Today’s consumer is constantly weighing up the convenience of online shopping versus the immediacy of the traditional high street, and drones potentially remove the major downside to online retail: delivery times and postage costs.
Grocery is one of the few retail sectors where online shopping remains a (rapidly growing) niche because people still go to major supermarkets for a weekly shop and nip to their local store for smaller purchases. Drones could be a factor in significantly altering people’s grocery shopping habits due to the potential for quick and cheap delivery of small baskets. Text-based delivery service Magic has already raised eyebrows in the US by offering bespoke, instant delivery of specific items, demonstrating the growing appetite for online immediacy.
This currently remains an expensive, boutique demand, but if drone delivery really does become standard practice, grocery retailers had better prepare for major changes in their customers’ online shopping habits. Early adopters could reap major benefits by latching on to a whole new market, eager for change.
Driverless trucks, on the other hand, promise mouth-watering savings for companies throughout the supply chain as wages, fuel and training costs could be slashed. Some estimates have placed the figure as high as 40% in savings, which could have huge ramifications for retailers’ balance sheets and the price of goods on shelves.
The technology also offers wider benefits outside of the industry for road safety, traffic congestion and pollution. Economic and population growth in Europe has led German experts to warn of a 39% increase in trucking volume by 2030. London Mayor Boris Johnson has noted the benefits that driverless trucks could bring to clogged roads and Volvo Group have pointed to potential 20% savings in fuel efficiency due to ‘platooning’ that would ease pollution.
The dilemma for the grocery industry is how to redistribute these potential savings. Should truck drivers be re-employed in related roles to mitigate the mass unemployment that could result? Should retailers pass the savings on to the consumer to remain competitive and ease the burden of rising food prices? Could they utilise the more efficient trucks to improve their online offering?
These are some of the big questions that the industry will be asking itself in years to come.
Despite all these tantalising benefits, there are still many obstacles to making drones and driverless trucks a permanent fixture.
There will inevitably be resistance from the industries and workers that are set to lose out, but the combined pro-drone clout of Amazon, Google and Walmart, alongside the major freighting companies that are backing driverless trucks, will surely win out. Automation has decimated entire workforces and industries in the past and unions like the URTU may balk at the proposals, but retailers could mitigate this by focusing personnel costs elsewhere, reducing pressure on the drivers that remain in work, and improving safety records.
But increased automation is an enormous issue that the entire world will have to address in time as a global surplus of labour becomes available at unprecedented levels (take a look at major changes in the legal sector) – the situation facing the grocery industry is not unique.
The biggest spanners in the works, for drones especially, are regulation and public perception. Currently, the commercial use of drones is banned in most countries (apart from some specific exemptions for Amazon) and the practicalities of mass drone use remains a complex logistical and legal problem. How do governments regulate the airspace? How would a multitude of drones affect commercial flights? Are there safety issues to be addressed?
Major legal changes – especially ones with global scope and vast, long-term implications – are difficult to execute and slow to arrive.
These concerns also connect to the problem of public perception, as images of drone-filled skies can border on the dystopian. For many, drones still carry negative connotations of surveillance and military operations, and some people may resist a potential future of skylines littered with drones.
This sort of widespread use is surely a way off yet, but in making those initial steps toward legalising drone delivery, governments have to bear in mind the future they are laying the foundations for. Equally, the grocery industry that will be exploiting the technology will have to prepare for major changes to workforces, budgets and consumer demands with smart strategies and some big ideas.
James Hassall, 2016