OCT 2022

Yoram Wurmser

Robots Haven’t
Taken Over—Yet
Innovation in Automation Drives the Forecast for 2022
and Beyond

Contributors: Jade Appel, Blake Droesch, Caroline Fulford

Robots Haven't Taken Over—Yet: Innovation in Automation Drives the
Forecast for 2022 and Beyond
When Jeff Bezos mused in 2015 about delivery drones being as common as mail trucks, the concept still seemed to be
part of a faraway future. Well, the future has arrived. Amazon expects to start delivering with drones by the end of 2022,
adding to its arsenal of automated tools. Meanwhile, robots in stores and fulfillment centers are becoming critical parts
of retail industry operations and key opportunities to improve the customer experience (CX).

3 KEY QUESTIONS THIS REPORT WILL ANSWER

Delivery Drone Units in the US, 2019-2024
1 How extensive is retail automation? thousands and % change
110.4

2 What are some of the factors that will determine 84.0%

future automation? 72.0%

65.0%
3 What can retailers do today to take advantage of the 55.0%
opportunities in automation? 49.0% 60.0

WHAT’S IN THIS REPORT? Our forecast for delivery

34.9
drones, fulfillment center automation, in-store robots, and
QR codes. 22.5
15.1
9.2

2019 2020 2021 2022 2023 2024

Delivery drone units % change

Note: the number of commercial unmanned aircraft systems (UASs) registered with the
Federal Aviation Administration that deliver purchased products or goods directly to a
consumer
Source: eMarketer, Aug 2022
277632 eMarketer | InsiderIntelligence.com

KEY STAT: Drone delivery hit an inflection point in 2022,

and growth will accelerate over the next three years.

Contents
2 Robots Haven't Taken Over—Yet: Innovation in
Automation Drives the Forecast for 2022 and Beyond
3 The One-Pager
4 Key Points
4 Retail Automation Shifts From Vision to Reality
6 Innovation and Consumer Pressures Push Adoption
8 Retailers Are Rethinking the Fundamentals
9 Read Next
9 Sources
9 Editorial and Production Contributors

Copyright © 2022, Insider Intelligence Inc. All rights reserved. Page 2

 The One-Pager

The One-Pager
Robots Haven’t Taken Over—Yet
Innovation in Automation Drives the Forecast for 2022 and Beyond
Retail robots play a big role in stores and fulfillment centers, and drones are waiting in the wings. We forecast that
nearly half of retailers operating fulfillment centers will deploy robots by 2024. Economic jitters aside, the potential for better
efficiency and an improved customer experience make long-term investments in robotic operations a must for retailers.

Key Stat Delivery drones, once just a dream, will more than triple by 2024.

Our Findings Your Opportunity

Despite economic uncertainty, the pace of Robots can improve warehouse efficiency and enhance
retail automation will accelerate. the in-store customer experience.

Drones have reached the J-curve: The number of
delivery drones will more than triple between 2022
and 2024, with the growth rate increasing each year.
Robots in stores are more prevalent than you may
think: Close to 40% of large retailers already use robots
in their stores.
Many consumers now use cashierless checkout:
Despite increased risk of theft, more retailers have
introduced cashierless checkout, and 14% of consumers
use it regularly.
Speed up fulfillment: Robots in fulfillment centers
quicken delivery times, but automation can also speed up
in-store service via cashierless checkout.
Reimagine your physical imprint: More automation could
allow for partially staffed stores or fully automated kiosks
in locations previously unsuitable for a brand.
Retrain employees rather than replace them:
Robots don’t need to replace people. They can release
employees for higher-touch roles, such as more extensive
in-store clienteling.

Also in this report: QR codes |

Cashierless checkout | Economic uncertainty and robots

Copyright © 2022, Insider Intelligence Inc. All rights reserved. Page 3

Key Points
■ The pace of automation in fulfillment is
accelerating. Retail drones will expand from nearly
35,000 in 2022 to over 110,000 in 2024. Although still a
tiny sliver of fulfillment, automated delivery is emerging
to become more than a proof-of-concept project.
■ Robotics in fulfillment centers continue to evolve
into more sophisticated tools. Nearly half of retailers
with major centers will have fulfillment robots by 2024,
and they are taking on more complicated roles.
■ In-store automation is also increasing. More than a
third of large retailers currently use in-store robots; by
2024, that figure should reach 43.2%. At the same time,
cashierless checkout continues to expand, with 14% of
consumers using it regularly.
■ All signs point to further pressure and incentives to
automate. A combination of economic, technological,
and consumer behavior factors have driven investments
in automation. As AI improves, 5G networks expand,
and funding for robotics increases, automation will be
able to handle more tasks. With consumers preferring
quick delivery, retailers will need to automate to keep up.
■ Automation may eliminate some jobs, but it will
create others. Retailers should use their savings from
better efficiency in fulfillment to create higher-touch
jobs that improve CX. That includes creating more
connections between ecommerce shoppers and in-
store associates, better clienteling tools for in-store
customer needs, and additional services.
Retail Automation Shifts From
Vision to Reality
Long-touted automated systems are starting to make
a difference for a broad variety of retailers. These
retailers see delivery drones, automated fulfillment
centers, in-store robots, and other automated devices
as key tools to meet consumer expectations for quicker
and better service.
Copyright © 2022, Insider Intelligence Inc. All rights reserved.
Robotics’ greatest impact in retail is currently in
fulfillment centers. Amazon has emerged as an early
leader, as it has with many retail technologies, with over
520,000 robotic drive units in its fulfillment and sort centers,
according to TechCrunch, but many retailers are catching up.
For instance, in May 2022, Walmart announced plans to
automate all 42 of its regional distribution centers and
build four next-generation fulfillment centers. We estimate
that 44.9% of retail fulfillment center operators will have
automation in 2022, growing to nearly half (49.5%) by 2024.
Warehouse and Fulfillment Center Robots in the
US, 2019-2024
% of warehouse and fulfillment center operators
47.5%
49.5%
44.9%
38.5%
34.0%
28.0%
2019 2020 2021 2022 2023 2024
Note: autonomous units and systems operating in locations where companies' goods are
stored, including warehouses, distribution centers, and fulfillment centers by an operator with
more than $10 million in annual revenues
Source: eMarketer, Aug 2022
277634 eMarketer | InsiderIntelligence.com
Delivery drone units have reached the J-curve in
adoption. The number of delivery drone units is still small—
only about 35,000 by the end of 2022—but the growth rate
is a rapid 55%. It’s still very much a niche but growing swiftly.
■ The pace of adoption will increase each year through
2024, reaching 84% in 2024 with 110,400 units
in operation.
■ We decreased our forecast by 6% in 2021 and 10% in
2022 due to delays arising from technical challenges.
As those issues are resolved, we expect adoption to
increase rapidly, which has already begun. Walmart
expanded its DroneUp delivery networks, Walgreens
and other Texas retailers partnered with Alphabet’s
Wing subsidiary for drone delivery, and Amazon
announced plans to start a drone delivery service called
Prime Air in late 2022.
Page 4
Delivery Drone Units in the US, 2019-2024 QR codes also continue to spread. Although QR codes
thousands and % change aren’t robotic, they do simplify automated exchanges, such
110.4 as checkout or links to product pages. We estimate that
84.0% they will continue to attract users even after a big pandemic
72.0%
bounce. One-third of US adults—88.9 million people—will
65.0% use QR codes in 2022. By 2025, over 100 million US adults
55.0% will use them.
49.0% 60.0

Smartphone QR Scanners in the US, 2019-2026

34.9 millions, % change, % of smartphone users
22.5 100.2 102.6
15.1 97.8
94.1
9.2 88.9
82.4
2019 2020 2021 2022 2023 2024
70.6
Delivery drone units % change

Note: the number of commercial unmanned aircraft systems (UASs) registered with the
54.4
41.0% 41.9% 42.3% 42.7%
Federal Aviation Administration that deliver purchased products or goods directly to a 37.1% 39.3%
consumer 32.6%
Source: eMarketer, Aug 2022
26.0%
277632 eMarketer | InsiderIntelligence.com

29.7%
7.9%
In-store robots are more prevalent than consumers may 16.7%
5.9% 3.8% 2.5% 2.4%
13.5%
realize. The percentage of large retailers (more than
$10 million in revenues) using in-store robots rose to 37.5% 2019 2020 2021 2022 2023 2024 2025 2026

in 2022 and will continue to rise, reaching 43.2% in 2024. QR scanners % change % of smartphone users

The rate for retailers overall will be lower. Note: ages 18+; smartphone users who scan a QR code at least once during the calendar
year
Source: eMarketer, Aug 2022
277630 eMarketer | InsiderIntelligence.com
In-Store Retail Robots in the US, 2019-2024
% of total retailers In-store cashierless checkout is also getting more love.
43.2% In our Bizrate Insights panel survey on retail trends, 14% of
40.3%
37.5% respondents in August 2022 said they used self-checkout
34.0% regularly, with another 30% either using it occasionally or
31.0% expressing interest in it. This figure hasn’t changed much
24.5%
over the past several months, but it does indicate a relatively
wide-scale use of the technology.

■ 58.8% of retail marketers report their stores had self-

checkout technologies as of August 2021, according to
a Raydiant survey.

■ 46,000 stores globally will use mobile self-scanning in

2019 2020 2021 2022 2023 2024
2022, according to RBR, up 10,000 from 2021 but just a
Note: autonomous units within a retail location operated by a retailer with more than $10
million in annual revenues third of the 161,000 expected by 2027.
Source: eMarketer, Aug 2022
277633 eMarketer | InsiderIntelligence.com

Copyright © 2022, Insider Intelligence Inc. All rights reserved. Page 5

How Interested Are US Adults in Using Cashierless were sold in 2021, and the majority were outside the
Checkout Technologies* at Stores? automotive industry, which traditionally has been the
% of respondents, by demographic, Aug 2022 biggest user of industrial robotics.
Gender
Female
■ Robotics as a service: In addition to large robotics
14% 11% 18% 23% 27% 8% sold to bigger companies, a group of startups is also
Male offering robots on a subscription basis for smaller
15% 13% 18% 23% 22% 9% retailers and warehouses.
Age
18-34 ■ 5G: Better 5G coverage can increase internet of
21% 15% 22% 18% 16% 7% things (IoT) coverage, in part due to higher capacity
35-54 for devices, but also due to higher speeds. As robots
16% 12% 18% 24% 23% 7%
and drones proliferate, they will work best in 5G. We
55-65
forecast that 5G device subscriptions in the US will
6% 8% 14% 27% 33% 12%
reach 103.0 million in 2022, up nearly 77% YoY. Globally,
Total 5G mobile connections will pass 1 billion in 2022,
14% 12% 18% 23% 24% 9%
according to CCS Insight.
Use it regularly
Have used before, but don't use regularly
Have not used, but very interested 5G Mobile Connections Worldwide, 2019-2026
Have not used, but somewhat interested billions
Have not used and not interested 4.51
Don't know what this is

Note: numbers may not add up to 100% due to rounding; *using technology to bypass a 3.60
checkout line such as mobile scan-and-go, “just-walk-out” technologies like the Amazon Go
stores, or “smart shopping carts” like the Amazon Dash Cart
Source: "The Insider Intelligence Ecommerce Survey" conducted in Aug 2022 by Bizrate
Insights, Aug 24, 2022 2.78
277890 eMarketer | InsiderIntelligence.com

1.99
Self-checkout has an increased danger of theft, though.
Unlike a lot of automation in retail, self-checkout raises the 1.21
risk of merchandise loss. For example, Wegmans recently 0.62
discontinued a self-checkout app after a rash of thefts. 0.21
0.01
2019 2020 2021 2022 2023 2024 2025 2026
Source: CCS Insight as cited in press release, June 14, 2022

Innovation and Consumer 276102 InsiderIntelligence.com

Pressures Push Adoption ■ AI: By enabling machines to adapt in real-world

The sizable increase in retail automation comes down
to changes in technology, the economic picture, and
consumer behavior.
Technology
Retail is adopting automation in part because the
background technologies have matured to the point that
they’re affordable. They’ve also proven to be effective.
■ Robotics: Orders for robotics hit a record in H1 2022
with nearly 24,000 industrial units sold at a value of
$1.25 billion, according to the Association for Advancing
Automation. Nearly 40,000 units worth $1.6 billion
conditions, AI is core to the development of robotics
and automated systems. After a record year in AI
investments in 2021, economic uncertainty has hit the
industry. Nonetheless, investors still poured $15.1 billion
into AI startups in Q1 2022, according to CB Insights.
Computer vision technologies and natural language
processing are developing quickly as well—both of
which are central to advances in robotics.
Challenges remain as technology transitions to the
real world. Despite rapid progress in some areas, most of
these technologies still confront hurdles. Last-mile delivery
robot Kiwibot, for example, stumbled in early deployments
because of uneven sidewalks and rapid traffic light cycles.
Similarly, Amazon shelved a comparable robot, Scout, as the
company adapted to ongoing economic uncertainty.

Copyright © 2022, Insider Intelligence Inc. All rights reserved. Page 6

Economic Conditions
Despite ongoing economic jitters, the US continues to
experience low unemployment—and some workers are
leaving the labor market permanently: The latest Bureau of
Labor Statistics (BLS) release reported a labor participation
rate of 62.3%, a full percentage point below pre-pandemic
levels. The tight labor market and continued uncertainty will
affect the adoption of automation.
Tight labor market fuels move toward automation:
Unemployment rose slightly in August 2022 but remains
low. As workers demand higher compensation and labor
dissatisfaction builds in low-wage jobs, retailers have
incentives to increase automation. Warehouse jobs have
been particularly difficult to fill and retain; Amazon might
not be able to find enough workers for the open roles it
anticipates by 2024, according to an internal study leaked
to Recode.
Higher inflation puts the brakes on real consumer
spending: Rising prices will have a twofold effect on
retailers, both of which make investments in automation
more expensive—at least in the short term.
1 Retail sales (excluding car sales) decreased in real
terms in August, as would be expected as prices rise
more quickly than wages.
2 The Federal Reserve raised interest rates 0.75% in
September, the third straight increase. The Fed hopes
to squash inflation with these rates, but they also make
a recession more likely.
The combined effect of lower sales and a looming
slowdown has led to some cutbacks in investment
in automation. Some robotics companies have laid
off workers, including delivery robot-makers Starship
Technologies and Nuro and commercial service robot-
maker Pudu.
But longer-term trends toward retail automation
shouldn’t change too much. Several robotics companies
have landed big automation deals in the past few months,
and major players such as Amazon and Tesla are expanding.
In addition:
Copyright © 2022, Insider Intelligence Inc. All rights reserved.
■ Amazon bought warehouse automation company
Cloostermans in September 2022, just a few months
after unveiling Proteus, a fully autonomous mobile robot
for the fulfillment center market.
■ Kroger and Walmart recently announced major
automation investments in fulfillment centers.
Regulations in automation are also evolving quickly. In
March, the Federal Aviation Administration (FAA) revised its
line-of-sight rules, loosening restrictions to make it easier for
drone operators to deliver goods.
Consumer Expectations
Shoppers want fast fulfillment. Amazon has historically
raised consumer expectations for quick delivery, and
competitors are catching up: The average ecommerce
delivery now takes two to three days, according to a
survey by FarEye. But the pressure for quicker delivery
is unrelenting—so much so that a slew of rapid delivery
startups has joined the market, some with dubious business
models. Even if many of these companies fail, they still alter
consumer expectations of what’s possible. Some retailers,
such as Canadian grocer Loblaw, are using these services to
test demand for ultrafast delivery.
Amount of Time US Internet Users Typically Wait
for Digitally Purchased Delivery Orders, June 2022
% of respondents
3% Less than 1 day
1 day 8%
2-3 days 53%
4-5 days 26%
>5 days 10%
Source: FarEye, "The Last Mile Mandate" as cited in company blog, July 18, 2022
276851 eMarketer | InsiderIntelligence.com
To meet the demand for rapid delivery, fulfillment
center automation—and drones, to a lesser extent—
will be important. Retailers are investing to keep up with
consumers’ expectations. Walmart’s four next-generation
fulfillment centers and its 31 existing centers, for instance,
will give the company the capability to fulfill orders from 95%
of the US population in one to two days by 2025.
Page 7
 Retailers Are Rethinking ■ More extensive in-store clienteling: Apps, such
as Red Ant or NewStore, that empower associates
the Fundamentals to provide personalized recommendations or better
visibility into inventory stock can improve the in-store
With the pace of automation only increasing, the experience and differentiate a retail brand. Quality of
industry has the opportunity to improve efficiencies service is the biggest influence on customers’ in-store
and meet growing consumer demand for better, faster satisfaction, according to Raydiant.
service.
■ Faster service: In 22 Walgreens pharmacies,
Automating manual jobs could open opportunities the company has introduced robots that can fill
for high-value jobs focused on CX. There’s a common subscriptions faster and more accurately than
assumption that automation leads to job losses, but it can pharmacists—helping to fill the labor gap as healthcare
also lead to job shifting. With robots and automated systems workers leave the industry and to reduce mistakes that
taking over restocking, fulfillment services, and checkout, can endanger patients. Self-service kiosks can also
the efficiency gains will create openings for more high-touch reduce order times and answer common questions,
online and in-store service roles. freeing associates to answer more complex inquiries
and expedite service in other ways.
■ More dynamic online experiences: Both Klarna ■ Enhanced services and new experiences: Numerous
and Bonobos, for instance, connect customers’ online
stores are adding services to attract customers and
chats with in-store associates to answer more involved
add new sources of revenues. CVS and Walgreens, for
questions. Some luxury apps have introduced options
instance, have invested heavily in a retail clinic strategy,
for concierge service or after-sale service. Almost
which has turned them into medical service providers.
30% of consumers cited “professional agents” as a
Over the past five years, there have also been efforts
leading loyalty-building factor, according to a Q1 2022
to add entertainment into the shopping experience,
NICE survey.
such as pottery classes or coffee tastings. In July,
Nike opened a concept store in Seoul, South Korea,
Leading Factors of Customer Service Affecting that includes QR code links to augmented reality (AR)
Loyalty According to UK/US Consumers, Q1 2022 experiences and a creative studio for influencers.
% of respondents
They have professional agents
■ Self-service kiosks outside stores: A third of
29% retailers plan to invest in self-service kiosks or smart
I can access self-service online vending machines this year, according to a study by
22% manufacturing solutions provider Jabil. Although this
I can easily get service using the digital channel of my choice is likely an inflated figure, it does point to a growing
21% option for a wide range of apparel and consumer goods
They have patient agents retailers to place branded automated or lightly staffed
9%
outlets in areas that aren’t ideal for a fully staffed store,
They have chatbots to guide me and get me what I need such as low-traffic or high-rent locations.
8%
They are familiar with my history as a customer Robotics will likely lead to tectonic shifts in
7% manufacturing. As low-skilled labor costs become less
Customer service has little or no impact on my brand loyalty important, some manufacturing may shift away from
5%
lower-cost countries—particularly as laws promoting local
Note: consumers ages 19-57; numbers may not add up to 100% due to rounding manufacturing, such as the Inflation Reduction Act, increase
Source: NICE, "2022 Digital-First Customer Experience Report," May 24, 2022
275767 eMarketer | InsiderIntelligence.com
incentives. This could have major implications on sourcing,
partnerships, design cycles, and fulfillment operations, and
retailers should be ready.

Copyright © 2022, Insider Intelligence Inc. All rights reserved. Page 8

Cybersecurity is even more important. More machines Editorial and
mean more areas that need to be protected from malware,
phishing, and other strategies dreamed up by hackers. As Production Contributors
the danger increases, most companies are increasing their
Anam Baig
budgets and building capacity to combat threats.
Rahul Chadha
Despite economic uncertainty, keep your eye on Matthew Corkins
automation over the long term. Although short-term Justin DeVoursney
investments may need to be pruned, any retailer that ignores Joanne DiCamillo
the possibilities from automation will risk the medium- to Magenta Fox
long-term health of their business. In-store automation Donte Gibson
will be an $8.4 billion business by 2030 based on a 25% Katie Hamblin
compound annual growth rate (CAGR), according to Dana Hill
ABI Research. The next year looks to be turbulent, but Erika Huber
technologies for automation continue to improve. Ann Marie Kerwin
Kyndall Krist
Na Li
Penelope Lin
Read Next Reuben Loewy
Jennifer Merritt
The Cybersecurity Risk: What Consumers Fear and How Stephanie Meyer
to Protect the Brand Heather Price
QR Codes Forecast and Trends 2022: Opportunities Erika Skorstad
Driven by the Contactless, Cashless Economy Rachel Tatarek
Amanda Woodman
Top Startups in AI 2022: Notable Players and Trends
Julia Woolever
Shaping the Innovation Landscape
Ali Young
US Click-and-Collect Forecast 2022: Plenty of New
Spending, but Less Market Disruption
Director, Report Editing
Director, Report Editing
Copy Editor
Graphic Designer
Senior Production Artist
Senior Chart Editor
Senior Chart Editor
Director, Charts
Director, Production
Line Editor
Vice President, Content
Copy Editor
Director, Primary Research
Senior Copy Editor
Director, Report Editing
Executive Editor
Product Specialist
Senior Director, Managing Editor
Copy Editor
Senior Copy Editor
Copy Editor
Senior Report Editor
Senior Copy Editor

Sources
Bizrate Insights
CB Insights
CCS Insight
FarEye
NICE
Raydiant

Copyright © 2022, Insider Intelligence Inc. All rights reserved. Page 9

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