Automation is transforming how retailers do business, and it’s just getting warmed up. Indeed, the global retail automation market is projected to more than double in eight years, from $16.55 billion in 2022 to $34.53 billion by 2030, as stores and ecommerce sites seek to streamline their operations, improve the customer experience, manage inventory with greater precision, and plenty more—all to secure an advantage in an increasingly competitive industry.
This article explores the wide-ranging benefits of automation in retail, the technologies behind its adoption, and the potential challenges facing the industry.
What Is Automation in Retail?
Automation in retail involves the use of advanced technology and tools to handle manual tasks traditionally performed in physical stores, on ecommerce platforms, and as part of back-end business operations. Use cases include automating customer support and checkout, simplifying return processing, optimizing supply chain management, analyzing shopper behavior, and personalizing marketing campaigns. Through automation, retailers can reduce costs by operating more efficiently, scaling easily to keep up with customer demand, and gaining a competitive advantage by providing a better customer experience.
Key Takeaways
- Data analysis, inventory management, transaction processing, and customer service are all candidates for retail automation.
- Retail automation benefits include increased efficiency, better customer experiences, and a streamlined sales funnel.
- Behind the scenes are technologies such as advanced analytics, customer relationship management (CRM), inventory management, and marketing automation.
- As more software-as-a-service (SaaS) applications and cloud-based integrated business suites add automation capabilities, smaller retailers will be able to tap into this technology.
Automation in Retail Explained
Automation is reshaping the retail industry, from how shoppers make purchases to how businesses manage their supply chains. But it isn’t as simple as deploying automation technologies and continuing with business as usual. To truly reap the benefits, retailers must rethink their operations. For example, with self-checkout systems taking over routine transactions and chatbots managing basic customer inquiries, store associates can be redeployed to spend more time providing personalized shopping assistance and dispensing product expertise. Behind the scenes, finance teams can shift from manual data entry and basic reporting to analyzing customer patterns and identifying new business opportunities. Likewise, inventory managers can become supply chain strategists charged with optimizing stock levels at all locations, and marketing teams can focus on creating targeted campaigns that are based on automated customer insights.
Such shifts in the workforce require retailers to retool their staffing approaches, training programs, and service models to take full advantage of their employees’ newfound time and attention. It also paves the way for innovation, in the forms of new product and service development, opportunities for business expansion, and other strategic moves that help retailers set themselves apart from their competitors.
How Automation Is Transforming Retail Operations
The success of automation in retail rests on sophisticated, interconnected technologies that work together to present retailers with a holistic picture of their customers and their operations. For example, when point-of-sale (POS) systems, inventory management, customer databases, and supply chain platforms share data, retailers are able to track sales patterns, predict inventory needs, and spot emerging trends in real time. This eliminates manual analyses and the need for coordination across departments, fueling faster, more strategic decision-making.
Additional examples of automation technologies used in the retail industry include:
- Machine learning and artificial intelligence (AI) to analyze and act on data and other triggers.
- The Internet of Things (IoT) to monitor and report on inventory and the overall supply chain.
- Blockchain to ensure supply chain integrity.
- Cloud computing for large-scale data storage and processing.
- Enterprise resource planning (ERP) software to manage orders, inventory, and operations.
- Customer relationship management (CRM) software to manage sales and marketing.
What Is a Retail Workflow?
A retail workflow is a series of interdependent steps that businesses follow to acquire, distribute, and sell their goods. Key components of a retail workflow include:
- Purchasing: Buying goods from suppliers.
- Vendor management: Vetting, onboarding, paying, and maintaining relationships with suppliers.
- Inventory management: Receiving, recording, monitoring, and restocking goods.
- Customer service: Assisting customers, facilitating sales, processing returns and exchanges, and responding to complaints.
- Accounting: Reporting and analyzing financial data.
- Marketing: Attracting, engaging, and retaining customers.
These functions are all candidates for automation. For example, in a bricks-and-mortar store, IoT-enabled shelf scanners can detect that a specific item is running low, automatically trigger a reorder through the retailer’s ERP system, and alert staff to guide customers to alternative products. Similarly, an ecommerce platform can automatically update product pages with real-time inventory levels and notify customers who have placed those products on their wish lists.
10 Types of Automation in Retail
It takes many integrated technologies for retail automation to work its true “magic.” Together, the following types of automated systems can create a more efficient, data-driven retail environment that benefits both businesses and their customers.
1. Automated Business Analytics
Every touchpoint throughout the retail workflow generates data about customers, inventory, financials, operations, customer service, suppliers, and more. The sheer volume of this data—and the fact that it has usually been stored in separate systems—has historically made it difficult for retailers to make sense of it all and use it to their advantage. With automated business analytics, however, retailers can efficiently collect, analyze, and act on their data. Business analytics enables them to identify past and current trends; examine the causes of those trends; predict future trends, events, and possible problems; and determine the best way to achieve specific outcomes.
For example, a retailer can use automated business analytics to identify an uptick in demand for a particular product and proactively order more to prevent delays in order fulfillment. Analytics are also useful for spotting supply chain bottlenecks, identifying products that aren’t selling as well as expected, and making better pricing decisions.
2. Behavior Analysis
Behavior analysis is a common application of business analytics, helping retailers spot patterns in customer behavior—what they buy, how they browse, what they return, etc.—to better understand, respond to, and even predict them. Findings can be applied across an entire customer base (“demand for this product spikes in early November”), among different demographics (“young men shop here twice as much in the summer vs. the rest of the year”), and at the individual level (“this customer purchases this product every three months”). Behavior analysis can inform decisions about how much inventory to order, where to place products in-store and online, and staffing needs. It can also reveal opportunities to streamline operations—for instance, if an analysis shows high return rates for certain products, retailers might revamp their sizing guides or product descriptions to help customers make better initial purchase decisions.
3. Personalized Marketing Automation
Marketing automation transforms behavioral insights into targeted email, social media, and advertising campaigns that can generate leads, move prospects through the buyer journey, improve the customer experience, and ultimately increase sales. For example, if a store knows it’s popular with young men in the summer, it can automatically send personalized emails or direct mail to just that segment to let them know about new inventory as the season approaches. Or, if an analysis shows that a customer is due to reorder a product soon, marketing automation software can automatically notify them of this, along with a few related purchase recommendations. As customers increasingly demand greater personalization, behavior analysis and marketing automation can be an effective combination for boosting sales.
4. Customer Relationship Management (CRM) Automation
CRM systems provides a single source of truth for customer information, enabling retailers to track and analyze every customer interaction across multiple channels. CRM systems capture and integrate data from ecommerce interactions, in-store purchases, customer service engagements, marketing responses, social media activities, loyalty program participation, and other touchpoints. This means retailers can automate personalized responses to specific customer activities, such as sending targeted emails to cart abandoners or delivering tailored product recommendations. The software can also notify employees about specific customer activities and suggest actions to take in response—or even perform those actions automatically. For example, the system might automatically alert store associates about a high-value customer’s preferences when they visit the store.
5. Self-Service Kiosks and Self-Checkout Systems
One of the more visible examples of automation in retail is the prevalence of self-service kiosks and self-checkout systems. Retailers rolled out more than 217,000 new self-checkout terminals around the world in 2023—a 12% increase over 2022—and over 2 million are projected to be installed by 2029, according to RBR Data Services.
These self-serve systems cut down the amount of time customers spend in line, limit the number of errors that human cashiers may introduce, and allow retailers to make more efficient use of their staff. They also become important data-collection points that help retailers respond to customer behavior in real time. If, for example, a grocery store experiences a run on bread and milk because of an impending snowstorm, the integration of POS data with an inventory management system will help retailers maintain optimal stock levels.
6. AI-Powered Chatbots and Automated Customer Service
Moving away from the long wait times, ineffective communication, and annoying hold music of telephone-based customer service is a win-win for retailers and their customers. Not only would 82% of people rather interact with a chatbot than wait to talk to a human, according to Tidio, but Gartner also predicts that conversational AI will reduce labor costs in contact centers by $80 billion by 2026.
AI-powered chatbots rely on natural language processing to understand customer interactions, pulling data from relevant business systems—such as ERP, CRM, and order management, to name a few—to issue tailored answers. Indeed, these automated assistants can handle a variety of customer-service tasks, such as checking order status, processing returns, answering product questions, providing shipping updates, and helping customers navigate websites or mobile apps. For more complex questions, chatbots can transfer customers to live representatives to continue the conversations. This combination of automated and human support powers 24/7 customer service so staff can cover more complex customer needs.
7. Inventory Management Automation
Inventory is the lifeblood of any retail business. Retailers have traditionally tracked inventory using spreadsheets and by manually counting and reordering stock when it runs low. But as the number of purchasing channels and delivery methods available to consumers—online shopping, curbside pickup, in-store pickup, etc.—has exploded, this task has become increasingly complex and inefficient, making it a great candidate for automation.
Inventory management automation not only monitors and replenishes stock automatically, but it can also:
- Determine the optimal amount of stock to order based on seasonality, peaks and valleys in demand, and supply chain timelines.
- Track the shelf life of perishable goods and determine optimal order amounts to reduce waste.
- Synchronize data across a retailer’s sales channels so it has a more complete, unified view of its inventory.
- Employ IoT devices to help retailers track the location of stock across multiple retail locations.
By automating these tasks, retailers can increase the likelihood of having the right merchandise in sufficient quantities to meet customer demand, while reducing the carrying costs associated with storing excess stock.
8. Supply Chain Automation
Retail supply chain management has become increasingly complex amid rising material costs, persistent labor shortages, and unpredictable global shipping conditions. To maintain efficient operations, retailers are turning to automation technologies that can optimize every aspect of the supply chain, from demand forecasting and sourcing to warehouse management and final delivery.
Central to supply chain automation is ERP software that integrates real-time data from suppliers, manufacturers, distributors, and retailers. AI, IoT, and robotic process automation (RPA) technologies play key roles in the process, such as collecting, analyzing, and acting on data to optimize supply chain operations.
For example, IoT-enabled robots can automatically retrieve items stored in a warehouse, while AI optimizes picking routes and delivery schedules, and RPA handles data entry and documentation. Together, these technologies increase operational efficiency and improve workplace safety by reducing the need for manual handling.
9. Automated Return Processing
Online shopping has raised the bar for customers’ expectations about returns and exchanges. Considering that returns accounted for $743 billion worth of merchandise, or 14.5% of retailers’ total sales volume, in 2023, according to the National Retail Federation, it’s important that retailers get it right. A smooth, quick process can help retailers turn a potentially negative experience that results in attrition into a positive one—and perhaps a competitive differentiator. By automating each step of the return journey—from label generation and tracking to refund processing and inventory updates—retailers can offer the seamless experience customers expect while efficiently managing returns at scale.
10. Store-Planning Automation
Store layout and product placement both hold sway in the shopping experience. With store-planning automation, retailers can maximize their products’ exposure to customers in physical locations. For example, IoT-powered sensors and analytics tools can track which aisles or sections customers visit most and which products they examine. This data helps retailers optimize floor plans, adjust product placement, and design more effective displays.
These same principles apply to digital stores, where automated tools track customer browsing patterns, time spent on pages, and click-through rates. Just as retailers can optimize their physical store layouts, they can also automatically adjust website navigation, refine product placement, and personalize digital displays based on real-time customer behavior.
Benefits of Automation in Retail
As retailers integrate automation into their operations, they’re discovering advantages that extend beyond simple task completion. In customer-facing scenarios, automation can help shoppers find accurate information more quickly. On the back end, retailers are able to make better business decisions that generate more revenue. Here is a closer look at the many benefits.
- Fewer human errors: To err is human. Automation removes much of the human factor in routine retail tasks, eliminating potentially costly mistakes made during data entry, return processing, inventory counting, billing, and financial reporting.
- Increased scalability: Automation enables retailers to quickly adjust their operations upward or downward to match changing demand, without having to proportionally increase costs or staff. That means they can easily accommodate higher transaction volumes and product demand, such as during the holiday season. Retailers can also accomplish more of their goals within the same timeframe, fueling business growth.
- Improved customer experience: Chatbots that are available 24/7, self-checkout systems that shorten wait times, and automated inventory systems that ensure product availability are all examples of how automation can improve the customer experience. An added benefit: Positive customer experience produces a flywheel effect, where satisfied customers recommend a retailer to others.
- Enhanced data-driven decision-making: Automation merges data from all retail channels and systems—POS systems, inventory management, CRM, and so on—enabling AI to scour the information to identify trends and predict issues. Automation tools can also analyze data quality for completeness and consistency to further improve accuracy. As a result, retailers become better equipped to make faster, more proactive business decisions and spot potential problems.
- Strengthened relationship management: By automating data collection and analysis, retailers can gain a deep understanding of their customers and use that insight to build stronger relationships. For example, a CRM system with built-in automation could analyze a customer’s purchase history to prompt a personalized promotional offer for a related product, demonstrating that the retailer understands the customer’s interests.
- Enhanced lead targeting: Automated systems help retailers more accurately target potential customers by analyzing their purchase history, browsing patterns, demographics, and other factors. These systems can also automatically segment audiences according to their similar characteristics and spur targeted marketing campaigns for times when they’re most likely to buy.
- Streamlined sales funnel: Automation removes friction in the sales process, which results in generating more business with less manual work required. For instance, an automated inventory system can alert browsers when previously out-of-stock items become available, abandoned cart recovery tools can step in to reengage hesitant shoppers, and smart pricing systems can adjust offers to match customer behavior and market conditions.
- Boost in sales and revenue: All of the above benefits of retail automation—fewer errors, ability to scale, improved customer experience, enhanced data-driven decision-making, and streamlined funnel—ultimately serve to increase sales and revenue. Why? Because at its core, automation empowers businesses to better serve their customers.
- Increased efficiency and productivity: Similarly, every beneficial aspect of automation in retail contributes to gains in operational efficiency and productivity, which, in turn, optimizes labor costs. At the same time, employees can assume more of the strategic work and focus on customer engagement, which also helps the business grow.
Challenges of Retail Automation
Despite its advantages, automation isn’t a cure-all for solving all of the retail industry’s problems. Stores and ecommerce sites may face significant challenges getting automation technologies up and running, especially when doing so in-house.
- High initial costs: The high up-front costs for software, hardware, infrastructure, and implementation can be automation deal-breakers, especially for small and midsize businesses (SMBs). The rise of cloud-based offerings with built-in automation features can offset these expenses, though, through subscription-based pricing models, and they can help get retailers up and running quickly.
- Integration complexity: Successful automation requires multiple systems to share their data and otherwise work in harmony. This can necessitate complex, expensive, and time-intensive engineering and development work. Cloud-based ERP systems alleviate those barriers, as vendors handle much of the technical integration work behind the scenes.
- Change management: The move to automation often sparks employee concerns about job security. Without proper change management—which demands a commitment from leadership, clear communication about how roles will evolve, and detailed training plans—employees may resist adopting the change, causing the initiative to sputter before it ever gains momentum.
- Cybersecurity and data privacy concerns: Any system that stores sensitive customer and financial data is an inviting target for cybercriminals. The challenge is particularly acute in retail automation, because multiple systems are constantly sharing data across numerous touchpoints. Security measures, such as encryption, multifactor authentication, and access controls, can go a long way toward establishing protection.
Future Trends in Retail Automation
While current automation tools are supporting improvements in retail operations, emerging tech trends promise to further transform how retailers manage their businesses and enhance customer service. Here are some developments that are forging the future of retail automation.
- Automation for all: Large, global retailers can absorb the high up-front costs of do-it-yourself automation implementations, and they have the resources to deal with the complexity—a luxury many SMBs can’t afford. But as more SaaS applications and cloud-based, integrated business suites add automation capabilities, smaller retailers will also be able to reap the advantages.
- Enhanced demand and sales forecasting: Retailers will increasingly focus on this area as they continue to maximize every dollar spent. By using AI to analyze the current market, historical trends, customer data, and competitive intelligence, retailers can more accurately forecast sales and predict fluctuations in demand.
- Dynamic pricing: Building on these forecasting capabilities, retailers can automatically adjust prices in real time by monitoring demand patterns, competitor pricing, inventory levels, and market conditions. These automatic adjustments are known as dynamic pricing, whereby retailers automatically raise prices when demand is high and offer discounts when needed to move inventory, all part of an effort to maximize revenue. These adjustments would be impossible to implement manually, given the volume of data and speed of analysis required.
- Generative AI (GenAI): Nearly two-thirds of all businesses regularly use GenAI, according to McKinsey. In retail specifically, organizations are exploring this AI subset to automate content creation, enhance customer service, and personalize communications. For example, GenAI can automatically generate product descriptions, marketing copy, and customer service responses, while maintaining brand “voice” and data accuracy.
Automate Your Retail Processes With NetSuite
Manual processes can hold retail businesses back in today’s fast-moving marketplace. NetSuite ERP simplifies retail automation through a comprehensive, cloud-based platform that connects all aspects of retail operations. The system uses AI to automate critical processes, including order processing, inventory management, supply chain operations, and warehouse activities, while eliminating the integration challenges common to siloed solutions. Through NetSuite for Retail, businesses can deliver consistent customer experiences, whether those experiences originate at mobile point-of-sale systems in stores or from personalized online marketing campaigns. This integrated approach eliminates the complexity of managing multiple systems, yet provides the scalability retailers need as their business grows.

Automation’s potential to streamline retail operations, improve the customer experience, drive business growth, and spur innovation is clear—and already in motion. Automation empowers retailers of all sizes to make smarter and faster decisions that are based on accurate, integrated, and real-time data. And as the technology advances and becomes more accessible, additional opportunities for efficiency, innovation, and growth will emerge.
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Automation in Retail FAQs
Which aspect of retail automation has the biggest impact on customer satisfaction?
Retail automation’s ability to improve the customer’s experience has the biggest impact on customer satisfaction. It’s understandable: Fast, accurate, 24/7 answers from chatbots, streamlined checkouts and returns, and personalized recommendations all lend themselves to a superior customer experience.
How do you automate a store?
Automating a store requires a systematic approach that starts with core operations—implementing automated systems for inventory tracking, checkout processes, and customer relationship management, or tying them all together with an enterprise resource planning system. Other advanced technologies can follow, such as self-service kiosks, Internet of Things sensors, and artificial intelligence tools, working together to improve efficiency and customer experience.
What is intelligent process automation in the retail industry?
Intelligent process automation in the retail industry is the combination of technologies, such as artificial intelligence, robotic process automation, machine learning, and natural language processing, to perform tasks more efficiently and make better use of organizational data.