Playing hide and seek: tackling in-store picking operations while improving customer experience

Abstract

The evolution of the retail business presents new challenges and raises pivotal questions on how to reinvent stores and supply chains to meet the growing demand of the online channel. One of the recent measures adopted by omnichannel retailers is to address the growth of online sales using in-store picking, which allows serving online orders using existing assets. However, it comes with the downside of harming the offline customer experience. To achieve picking policies adapted to the dynamic customer flows of a retail store, we formalize a new problem called Dynamic In-store Picker Routing Problem (diPRP). In this relevant problem - diPRP - a picker tries to pick online orders while minimizing customer encounters. We model the problem as a Markov Decision Process (MDP) and solve it using a hybrid solution approach comprising mathematical programming and reinforcement learning components. Computational experiments on synthetic instances suggest that the algorithm converges to efficient policies. Furthermore, we apply our approach in the context of a large European retailer to assess the results of the proposed policies regarding the number of orders picked and customers encountered. Our work suggests that retailers should be able to scale the in-store picking of online orders without jeopardizing the experience of offline customers. The policies learned using the proposed solution approach reduced the number of customer encounters by more than 50% when compared to policies solely focused on picking orders. Thus, to pursue omnichannel strategies that adequately trade-off operational efficiency and customer experience, retailers cannot rely on actual simplistic picking strategies, such as choosing the shortest possible route.