Wednesday, 26 July 2017

Investopedia/Mark Kolakowski: Amazon vs. Wal-Mart: Who Is Winning the Robot Wars?m

Amazon vs. Wal-Mart: Who Is Winning the Robot Wars By Mark Kolakowski | Updated July 26, 2017 — 6:00 AM EDT
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-0.17%'s (AMZN) dramatic growth into a corporate retail disruptor -- and its attack on numerous industries -- has launched a new theater of business conflict, a war of the robots, according to a story in Wall Street Journal. Increasingly, companies are no longer using employees to match wits against their corporate rivals. Instead, they are fielding robots and machines.
Robot Wars

Amazon is pushing aggressively into robots to replace human labor with the goal of slashing costs, thus dramatically boosting efficiency, and thus crushing its rivals with its ability to buy goods and sell products at low prices. Amazon needs only about one minute of human labor to ship a typical package, according to CNN. The key was Amazon's 2012 acquisition of robotics firm Kiva Systems, based in suburban Boston. In 2014, Amazon began using Kiva's squat, orange robots in its 20 distribution centers, initially with 15,000, expanding to 30,000 in 2015, and 45,000 in 2016, per reports in The Seattle Times and the Daily Mail

Amazon reports its quarterly results on Thursday while Wal-Mart releases its numbers on August 17.
Rivals Respond

This onslaught is forcing a long list of retailers to respond. Brick-and-mortar powerhouse Wal-Mart Stores Inc. (WMT), the world's largest retailer, has stepped up its use of machines in various applications at many of its 4,700 stores. It has already cut human staffing per square foot of store space by 15% over the past decade, the Journal reports. At the same time, home improvement superstore chain Home Depot Inc. (THD) is increasingly replacing human cashiers by expanding self-checkout in its stores, and is experimenting with giving customers scanner guns to speed the process further, the Journal says. Jeweler Tiffany & Co. (TIF), meanwhile, is replacing human silver polishers with machines.
Amazon's Lead

But right now, it's clear that Amazon is well ahead of rivals in leveraging robots. At Amazon, the old way of fulfilling orders was to have human "pickers" race through a huge warehouse to pull together the disparate items in a customer order. Now the pickers stay in one place and the Kiva robots bring racks of merchandise to them. To speed the process further, computer screens guide the pickers to the exact spot in the racks. As a result, pickers can grab many more items per shift than before. Additionally, Amazon can pack about 50% more merchandise in a distribution center, since the use of Kiva robots has eliminated the need for wide aisles that human pickers could negotiate. Both CNN and the Daily Mail describe the process in detail.
Getting a Charge From Robots

In Seattle, Amazon has opened a store without a human cashier, and it also has announced its first product delivery by automated drone in the U.K., as reported by The Seattle Times. Just made public Wednesday was a patent filed by Amazon in 2015 for a fleet of robots that would could be summoned by people in airports, shopping malls or other public places to charge their phones and take orders for merchandise, CNBC reports. The concept includes giving these robots the ability to find people whose cell phones have less than 10% battery charge left. Users would have to pay for the service by viewing advertisements, answering a survey, browsing for merchandise, or making a purchase.

How far, or if, this concept has gone beyond the conceptual stage, CNBC does not say. Nonetheless, Amazon's willingness to spend massively on R&D, including research that goes beyond its current core businesses, positions it for continued technical dominance. (For more, see also: Why Mega Tech Stocks Will Win Longterm.)
Wal-Mart Is Watching You

Wal-Mart is belatedly trying to catch up by expanding its use of machines - not robots. It's installed a new Cash360 machine in most of its 4,700 stores that replaces human clerks in counting and processing cash receipts. Additionally, invoice clerks in the stores are being replaced with centralized systems. The Journal mentions several more automation initiatives at Wal-Mart. An increasing number of checkout registers are being converted to self-serve. An experiment is being conducted with touch screens to speed the processing of merchandise returns. Staff is being redeployed to support in-store pickup of grocery orders placed online by convenience-seeking customers.

More intriguingly, Wal-Mart has applied for a patent on a system that uses facial recognition to determine customer satisfaction and adjust staffing in response, the Journal says. It also is experimenting with touch screens to give customers product information, to help them make purchase choices. (For more, see also: How Home Depot, Best Buy, Wal-Mart Can Beat Amazon.)
Survival Scenarios

How quickly U.S. companies adopt advanced technology may determine which ones are able to lower costs enough, and attract enough sales and profits to reinvest and survive longterm - while boosting their stock prices for investors. Adoption also has major consequences for the economy. About two-thirds of retail jobs in the U.S. are in danger of evaporating by the year 2030 as a result of automation, according to a 2015 report by Citi Research, a division of Citigroup Inc. (C), cited by the Wall Street Journal.

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