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How will automation fare post-Covid 19?

How will automation fare post-Covid 19?

The view of all vendors is that automation will become more important as a result of Covid-19. While this is not unexpected, should vendors be more cautious?

Economic activity has ground to a halt in much of the world. Grocers, medical device suppliers and pharmaceutical manufacturers appears to be the only winners in our Covid-19 pandemic world.

More specifically, eGrocery has been one of the main beneficiaries of Covid. However, these companies have been so successful that they have had to limit access to their sites.


Source: FT.com, March 28, 2020

The outsized demand for online grocer's services has led to criticism of the online grocery model. However, this criticism is misplaced as no business expects to increase sales by 10X in a week.

Inadvertently, the closure of some online grocery stores has led to overflow leading to a huge sales increase by other businesses in the last mile, such as Beelivery.

The Sun recently ran an article (March 24, 2020) on how to get hold of groceries online.


Source: The Sun, March 24, 2020

So, what has all this got to do with automation?

Well, while the grocery sector is experiencing demand that outstrips supply in some cases, other retail sectors are faring less well.

Arcadia Group, a British clothing retailer, recently furloughed 14,000 employees as a direct result of Covid-19. The group is not alone among retailers to look for survival alternatives. 


Source: Retail Gazette, April 3, 2020

It appears that the non-food/non-Grocery retail sectors are struggling and may struggle to restart their businesses, especially retailers with large store portfolios.

While these retailers will most likely be able to operate an online offering throughout the Covid-19 shutdown, it is also likely that once any government help is turned off, that these companies will have to subsidise their store operations with online revenue.

STIQ suggests that these retailers will be prime automation technology candidates, but may not have the financials to invest in automation, especially from a Capex view.

Automation vendors may want to explore new business models and offer these retailers a variety of flexible payment options and/or business models.

As FT.com reported on the re-opening of store, footfall has been half compared to what it was pre-pandemic, even in grocery stores and other stores have yet to reopen.


Source: FT.com, April 12, 2020

 

Disclaimer: the author is an advisor to Beelivery

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