Drones & Retail: taking flight in 2019?

Drones ended 2018 as a national pariah as hundreds of flights were cancelled on 20 December, with the military being deployed to Gatwick Airport following multiple drone sightings. Fortune reported airlines lost a total of $64.5 million during this incident, as tight timetabling ensured the disruption took days to correct. The Israeli-developed Drone Dome system, that can detect and block communications between a drone and its operator, was believed to be the technology used to resolve the incident.

Yet prior to this festive misery, the UK had been at the progressive forefront of exploring the use of drones in a commercial context. Amazon announced in 2016 that it was teaming up with the UK's Civil Aviation Authority (CAA), to explore the reliable and safe delivery of parcels by drones. The CAA granted Amazon permission to test beyond the line of sight operations in rural and suburban areas, to test sensor performance to ensure drones can circumnavigate obstacles, and to test flights with multiple drones controlled by a single operator. Amazon's Prime Air business has confirmed the company's largest outdoor facility is in the UK. In January 2019, despite the prior month’s drone chaos, the media reported the company was undertaking tests in the Cambridgeshire countryside.

The company has stated its aim is to use Prime Air to deliver packages via drones in 30 minutes, with the technology thought to be particularly of use in cutting delivery times to less urbanised areas. The company emphasises its drones will be developed with 'sense and avoid technology' and that they will continue to work with policymakers and industry to design a drone air traffic system that will recognize drone pilots, flying routes and ensure an adherence to regulatory requirements. Just such a system is being co-developed by the UK's National Air Traffic Agency (NATS) and the start-up Altitude Angel, who aim to launch it in 2019 or 2020. In November 2018, just before the rogue activity at Gatwick, the partnership launched Operation Zenith, an ambitious drone demonstration at Manchester Airport. The unmanned aerial vehicle (UAV) scenarios included equipment delivery and obeying an automated instruction to clear the skies for a police helicopter landing, showcasing how it is possible to create a foundation service to safely unlock the social and economic benefits of drones.

As a glimpse of this future, the Chinese retailer JD.com has been delivering goods for the last two years via drones to rural areas in China that would be inaccessible for large delivery vehicles. It also recently completed its first drone delivery outside of China, delivering books and backpacks to school children over 250km away in Indonesia. The company has stated its ultimate goal is to provide same or next day delivery to 85 percent of customers. Meanwhile international brewer AB InBev has recently been piloting an inventory visibility system in a busy grocery store in Montreal, collecting hourly and daily data on ‘out-of-stocks’ and 'real share of shelf'. Tech company Pensa's systems scanned dry shelves and coolers, capturing 15.9 million images during 200 flights. This helped the retailer eliminate 'out-of-stocks' hours ahead of manual systems, driving incremental sales and thereby providing a competitive advantage. In the US, Walmart has recently filed a patent to get drones to fly in stores as a customer service feature, consumers calling them via smartphones to guide them to a product or research something, as store employees do now.

Although this may spark fears of rampant automation and job losses, a recent PwC study highlighted that drone technology could add £42bn to the UK economy by 2030, create over 600,000 jobs and generate significant opportunities in the retail sector. Beyond delivery, drones could also improve logistics through inventory management, as seen with InBev, and traffic analysis, whilst also improving warehouse security through video monitoring and even improving marketing photography. Drones could also assist retailers with real estate planning, gathering location information and imagery of places that would be suitable for a new store.

The pre-Christmas disruption will rightly cause people's minds to focus on safety and accountability, and may well discourage regulators from relaxing the rules governing drone use in the short-term. Yet the economic advantages are likely to prove irresistible to the UK's government and to its retailers, as commercial drones take flight in the near future.