UK retail automation: Retailers adopt AI and robots to cut labour costs and boost efficiency

As UK retailers face rising labour costs due to April’s national minimum wage increase and higher employer national insurance contributions (NICs), UK retail automation has become a key solution. A surge in investment in advanced technologies, such as robot packers and AI cameras, is set to revolutionize the sector, streamlining operations and reducing dependence on human workers.

Electronic shelf labels, which allow prices to be updated at the press of a button, are already making waves in European markets. By 2025, UK high streets will see the widespread adoption of this technology, slashing the time and manpower spent replacing paper tags. Currys, the electronics chain, is set to roll out the tech across 100 of its UK stores, following successful trials in Nordic outlets. Other supermarkets, including Sainsbury’s and Co-op, are also experimenting with these digital price tags.

Self-service technology has long been a feature in UK supermarkets, but it’s now expanding into other retail sectors. Fashion retailers like Primark and Next are rolling out self-service tills, with Primark extending them to at least five more stores by spring 2025. More innovative self-checkout systems are emerging, such as those in Uniqlo and Zara stores, where customers can ring up entire baskets without manually scanning each item, using radio-frequency tags to speed up the process.

In the grocery sector, hybrid tills that can be used by staff or customers are being tested. These versatile setups are being introduced in multiple locations, and large self-checkout stations are now capable of handling full shopping trolleys. Sainsbury’s and Tesco have introduced systems like SmartShop and Scan as You Shop, where shoppers scan items as they go, cutting down on the number of staff needed at checkouts. Sainsbury’s reported that 30% of its festive period sales were processed through SmartShop, boosting both efficiency and cost savings.

Automated returns machines are another innovation being tested. Shoppers can return unwanted items with a simple scan of a QR code. John Lewis is experimenting with these machines in select Waitrose stores, a step that could reshape the returns process across the UK.

Despite these advancements, fully automated, unstaffed stores have yet to become mainstream. Amazon’s “just walk out” stores, which use app-based entry and AI to track purchases, have not seen the success anticipated, with several locations closing in 2023 and 2024. Tesco’s GetGo stores, which launched in 2021, are also limited in number, with just four operating in the UK.

Warehouse automation is another key area of focus. Retailers are increasingly relying on robots to improve efficiency in storage and order fulfilment. Sales of robots to logistics, food, and drink companies rose by 31% last year, with autonomous robots like those used by Amazon and John Lewis moving products to human workers for packing. Ocado has expanded its use of robots to not just pick items from crates but to pack bags and load delivery vans, enhancing speed and precision.

AI is playing a central role in improving both in-store and back-end operations. AI cameras are now being used to monitor stock levels in real-time, allowing retailers to reorder items automatically when shelves run low. Morrisons has added these cameras to its shelves to manage stock efficiently. Similarly, retailers like Sainsbury’s and Waitrose are deploying AI to optimise stock levels, analyse trends, and schedule labour efficiently. Sainsbury’s has even used AI-powered forecasting tools as part of a £1bn cost-saving initiative.

AI’s role in customer service is also expanding. Tesco’s CEO, Ken Murphy, predicts that AI will power interactions with customers across the business, analysing loyalty data to offer tailored shopping advice, health tips, and savings suggestions. This personalised approach could redefine the shopping experience, allowing retailers to target customers with highly relevant offers based on their buying habits.

As the UK retail sector leans more into automation, the consequences are clear: fewer entry-level jobs and greater reliance on technology. While these innovations promise enhanced productivity, they also raise concerns about job losses and the impact on the labour market, particularly in an industry that has long been one of the largest employers in the UK.