Robots working on laptops

The world feels as if it is slowly getting back to normal post-pandemic, at least in your author’s home country, where the UK Government has lifted almost all its previous COVID restrictions. However, some things have clearly changed. Even if we are now returning to the high street and swapping our homes for workplaces (at least on some days), the new world will almost certainly be one with fewer humans in functional roles. Automation and robots are game changers for many industries.

Begin with retail. Sure, we have crossed the digital Rubicon and 20%+ of all retail purchases are now being made online in countries such as the UK and US. However, this still leaves a very large percentage still conducted in brick-and-mortar stores. There is a quiet revolution going on here: think more interactive signage, smart price tags, remote checkout systems and a swathe of other acronyms. The guiding principle is one of reducing friction – in other words, making the retail experience as seamless as possible. This explains why retailers are experimenting with trends such as BOPIS, ROPIS and BORIS, respectively: buy online, pick up in store; reserve online, pick up in store; and buy online, return in store.

Beyond these developments, consider how commonplace contactless payments have become in stores. They now account for 1-in-2 in-person transactions versus 1-in-3 pre-pandemic, per commentary from Mastercard last week. Why tap with your card or phone though, when you could just use a remote check-out service instead? Amazon’s cashierless technology (which we saw in action for the first time in the UK last year) is being adopted by many other retailers too – partly because it is quick, but also since finding people to take positions as cashiers is currently challenging. An alternative version to this technology is being provided by start-up Zliide, which has pioneered the use of detachable digital fobs that are released from high-ticket items (such as clothes) once they are paid for via Apple Pay.

Back in the factory, several companies are swapping out humans for robots. Simple, repetitive tasks such as lifting a piece of metal into a press or moving goods around a warehouse can be done by machines at a lower price than it would cost to hire a worker to perform the same role. Formic, a robot-leasing company, offers its robots from $8/hour. This is less than the minimum wage in 32 US states. Anecdotally, factories that have deployed such robots see many benefits, particularly if they can redeploy existing workers to perform more value-added tasks instead. Additionally, as with some more menial retail roles, finding new employees to perform basic tasks such as the above can be hard. Either way, as we first wrote in 2012, the robots are coming. 

3 February 2022

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Heptagon Capital is an investor in Mastercard. The author of this piece has no personal direct investment in the business. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.​​​​​​​​​​​​​​​​​​​​​​​​​​​​ 

Alex Gunz, Fund Manager

Disclaimers

The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital LLP believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital LLP, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital LLP is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital LLP disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document. 

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