Michael Baxter says micro fulfilment centres and robots can breathe a new glorious life into the High Street, turning the problem of returns from online retail into a new opportunity.

I don’t know what it’s like where you live, but where I am, the local High Street is a disappointing shadow of what it used to be. Once fine shops are now empty shells. Restaurants, cafes and coffee shops have partially filled the spaces, but stopping for a coffee or a meal whilst out shopping is not so much fun when there isn’t much shopping to be done. So, can the High Street be saved? I think it can, and the answer lies with robots, micro fulfilment centres and creating serendipity.

Everybody knows why the High Street is in crisis. The internet has hollowed it out. E-commerce is a great disruptor. But there is a snag. The disruptor is struggling too. Maybe the disruptor is even being disrupted. In the UK, for example, the two most famous online retailers, ASOS and Boohoo, have seen share prices crash. In 2022, it is not unusual for a company to see sharp falls in their shares. But for ASOS and Boohoo, it has been something else. ASOS shares have lost around 75 per cent of their value since the beginning of the year. Boohoo didn’t fare much better. Compare that with a more traditional retailer, shares in Next, a well-known British fashion retailer with a strong High Street presence and online sales, have fallen but by nowhere near as much.

It is part of a wider trend. As a recent report on Bloomberg said, shares in online retailers like Amazon, Shopify and Wayfair have seen shares fall by a much higher percentage than the S&P 500.

There is more than one reason why online retailers have had a hard 2022; in part, it seems that Covid did not accelerate the shift online as much as previously expected. As the pandemic eased, online retail has partially shifted back to pre-Covid habits. But there is another problem, and this problem takes us to the core of this article and why robots and micro-fulfilment centres are creating this new opportunity.

The problem is returns. Boohoo, for example, recently blamed a higher level of customer returns as a partial explanation for disappointing profit projections.  But it is hardly surprising. According to National Retail Federation and Appriss Retail, US retailers expect total returns in 2021 to have increased by 16.6 per cent over the year before, hitting US$761bn.

The trend is up. UPS coined the phrase National Returns Day to describe the day in early January when it returns the most packages. According to Statista, the number of packages returned in the US during the week, including National Returns Day, increased from one million in 2016 to 1.75 million in 2021.

The High Street opportunity

The opportunity comes in the form of local warehouses, served by robots, linked to more old-fashioned physical retail showcases.

The cost of returning goods can be prohibitively high, reducing what are already very thin margins to possibly unsustainable levels. For the customer, there is a problem, too, one we all intuitively understand — and that is the hassle factor. Online shopping has the drawback of waiting for a delivery and not being able to obtain the goods you ordered instantly.

The solution lies in local warehouses near your home or micro fulfilment centres. The customer can order online and either collect from the local warehouse or have the item delivered. If they need to return the item, they will also have the choice of sending it back or taking it back in person to swap for another item, such as for an item of clothing in a different size or colour.

For the vendor, because of the short distances involved in delivering the item and facilitating returns, their costs of delivering and handling returns are reduced enormously.

In short, among the advantages of local warehouses — or micro fulfilment centres — is that they save money for the retailer and provide the customer with the opportunity to collect in person, avoiding the hassle of waiting for a delivery.

This also plays to the issue of carbon footprints; shortening the journey, at scale this, is potentially very important.

Queue the robots

Centralised storage and distribution are not new. Argos in the UK has been operating this way seemingly forever; what is new is the technology used. This is where robots enter the story as the missing ingredient.

Before robots, the cost of providing labour for small local warehouses was often prohibitively high. There are economies of scale in manning a warehouse, which is one reason they are traditionally so large. Robots represent a game-changer. The cost of operating a warehouse efficiently, if need be, 24/7, is transformed.

Today’s robots are highly mobile, dedicated machines powered by data from a centralised control system. This means you can get a few robots to manage the smallest of fulfilment centres, to deliver high-end service without the risks and redeploy them wherever needed.

Furthermore, AI can be employed to create improved stock control helping local warehouses anticipate customer demand more accurately, reducing the need to have large warehouses by applying intelligent stock control.

The added opportunity lies in the extra services that can be provided to the customer when they collect or return an item to swap it for something else, in turn creating serendipitous opportunities for the vendor and customer to spot that exciting item – a kind of unexpected inspiration.

Imagine this potential

The potential to use robotic technology and AI to reimagine the high street has never been better positioned than it is right now.

The micro fulfilment centre could exist on one floor of a former large store, subsequently closed down. Surrounding this floor, a myriad of opportunities are created for the vendor to upsell and for the customer to re-experience the magic of the physicality of shopping.

Cafes, restaurants and coffee shops have a new reason to exist. Pop-Up shops could emerge, but there is an opportunity to provide information. I see shop windows style presentations, showrooms, mannequins, a treasure trove of ideas, an Aladdin’s cave of wonder, pure style — but substance, the actual products, on another floor, stored away, making super-efficient use of space, just a short robot’s journey from the customer’s embrace.

It is an exciting image — a high street that inspires us to think of a modern future, backed by automated warehouses, nearby but not cluttering the aesthetics of a dynamic High Street.

That’s why I think robots can save the High Street.