Image credit: Symbotic
People spend about 60 hours a year grocery shopping. Since the pandemic online sales have climbed from $62.2 billion in 2019 to $95.8 billion 2020, a 54 percent increase, and they are projected to reach $112.9 billion this year and steadily rise to $187.7 billion in 2024.
Keeping up with fulfillment at that level is a challenge for grocery retailers, which rely on humans to select items for each customer order. Now retailers are reimaging their grocery stores and installing micro-fulfillment centers to keep up with demand. These mini warehouses can store five times as much inventory in the same footprint as a traditional store and are driven by artificial intelligence.
Micro-fulfillment centers use automated robots to select items for customer orders. Albertsons’ Kroger stores already has launched two standalone fulfillment warehouses, and six more are planned. Kroger teamed with Ocado Technology to deploy dozens of automated robots in large warehouses to address the growth in online orders.
Robotic Personal Shoppers
Walmart is also getting in the game. Walmart is the second largest online retailer in the U.S., after Amazon, and projects its total ecommerce sales will reach $75 billion this year. More than half of the company’s domestic sales come from groceries.
To accommodate that growth, the big box retailer is building mini warehouses adjacent to dozens of its stores to address the uptick in online sales. The 20,000 to 30,000 square-foot micro-fulfillment centers will be inhabited by Alphabots, automated robots that glide between shelves of packaged goods collecting items for customer orders. The items are transported to packing stations where employees bag them for customers. Walmart claims the technology will allow customers to receive their groceries within an hour placing the order.
Artificial intelligence drives the automated picking system, which comes from Alert Innovation, and has been operational in Walmart’s Salem, NH grocery fulfillment center since 2019. Built on multiple levels, the robots can move on the x, y, and z axes to retrieve items. Machine learning identifies the bin location of each item to ensure each robot is sent to the correct bin to fulfill orders expediently. The AI-based system also tracks inventory and can correlate items frequently purchased together, which improves bin positioning and automates reordering and restocking.
Behind the Scenes
Alert Innovation Founder and CEO John Lert designed the technology to satisfy his vision of the Novastore, a combination of a fresh market and an automated warehouse. Customers place online orders remotely, in this case using the Walmart app, or at store kiosks. Shoppers can select their own fresh foods (produce, meat, seafood, and flowers), while packaged and dry goods are collected by the Alphabot simultaneously.
The vertical warehouse allows retailers to fit the equivalent of a 100,000 square foot store in one that’s only 17,000 square feet. As many as 200 robots can whiz through the Novastore fulfilling orders in about five minutes. The system cuts labor expenses, reduces shrink, improves inventory tracking, and automates replenishment, Lert has said. Alert hopes its scalable solution will appeal to large and small retailers.
Image credit: Alert Innovation (rendering of a Novastore)
“The ability of the retailer to serve customer needs and make money will be dramatically improved, and that’s what will drive this paradigm shift. When retailers can make more money, and customers can have a dramatically better shopping experience, the old models will disappear because they can’t compete on either dimension of customer experience or retailer profitability,” Lert says.
On the back end, Walmart is automating its distribution centers as well. The retailer is adding Symbotic robots to 25 of its regional distribution centers. The Symbots can extract boxes from incoming pallets and build customized pallets with specific items for its individual stores. The large robotic arm sorts boxes of incoming merchandise and places them on wheeled shuttle, where AI determines and records their placement on the warehouse shelf.
Last year, Walmart also adjusted its online ordering app. Customers previously had to purchase groceries separately from other goods, but the retailer merged the apps to streamline its e-commerce efforts. Walmart reports an increase in sales of general merchandise from its online grocery customers.
More recently, Walmart partnered with media conglomerate Meredith Corporation to enhance the app’s capabilities. The app helps users plan and make meals using artificial intelligence that can scan Meredith brands for recipes using keywords or product images, communicate with chatbots, automate shopping of recipe ingredients, and connect to smart speakers and smart displays.