Four things we can learn from Walmart’s automated micro-fulfillment expansion

Date : 28 January 2021

Stewart Samuel

Program Director - Canada

Building on its existing automated micro-fulfillment partnership with Alert Innovation, Walmart is scaling up its programme through engaging with a broader range of partners including Dematic and Fabric.

Improving availability, speed and efficiencies

Walmart started piloting the micro-fulfillment concept at its store in Salem, New Hampshire, in 2019, using an automated solution in partnership with Alert Innovation. This setup involves a modular warehouse being built within, or added to, an existing store. Automated bots retrieve items from the fulfilment centre, brought to a workstation and assembled into orders by store associates. This concept has improved product availability, enabled faster fulfillment and driven efficiencies by fulfilling orders for multiple stores.

Source: Walmart

Working with a range of technology partners

The retailer plans to expand this concept by scaling the number of stores that will serve as local fulfillment centres. The company is planning dozens of locations, with more to come. It will partner with a range of companies, including its existing partner, Alert Innovation, along with Dematic and Fabric. Both these companies have experience in the US market. Dematic has partnered with Meijer while Fabric developed a fulfillment centre for Fresh Direct, prior to the online grocery retailer being acquired recently by Ahold Delhaize.

Testing different configurations

Through these partnerships, Walmart will test different orientations and add-on innovations to understand what works best in different environments. In some stores, the fulfillment centres will be in built in existing space, while the footprint will be expanded in others. The retailer is also planning to add automated pickup points. Walmart has been testing these elsewhere, including in Texas. It is also worth noting that Walmart Canada is piloting a manual local fulfillment concept.

What does the scaling of micro-fulfillment mean?

There are several takeaways from this:

  1. Micro-fulfillment will be part of the solution - based on Walmart’s scaling-up, along with the plans of others, including Albertsons which has partnered with Takeoff Technologies and HEB and Swisslog, major retailers see a role for automated micro-fulfillment as part of the solution for grocery ecommerce
  2. Channel will continue to grow - it also highlights that the accelerated growth the channel has experienced over the last year, and consequently higher penetration, is expected to remain and continue growing. There is no returning to pre-COVID-19 levels
  3. Improving channel profitability is a priority - linked to this, it also highlights the imperative to improve channel profitability, with automation expected to play a key role
  4. Omnichannel is the way forward – the physical store will be an integral element of retailers’ ecommerce strategies, and optimising this will support business profitability over the longer-term

Improving online profitability is one of the key trends we're watching in North America this year. Retail Analysis subscribers can download our full trends report, North America Retail Outlook 2021.

Source: IGD Research

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