Artificial Intelligence

How Robots Are Shaking Up The Grocery Industry

How Robots are Shaking up the Grocery Industry

It’s a combination of the latest technology and prehistoric human need: the increasing trend of using robots in the grocery industry. It has gained speed in 2018, showing how fulfillment — in many cases, following the lead of Amazon — is relying less on human participation as eCommerce buyers continue to change their shopping habits and expectations.

If you were to seek out companies not named Amazon that have recently gone full-speed into robotic logistics, you could do worse than look to the grocery industry.

In early November, grocery group Ahold Delhaize — the world’s eighth biggest grocery retailer — said it  would launch automated warehouses to speed up completion of orders and slash delivery times. Partnering with startup Takeoff, Ahold will automate order collection at mini “robot supermarkets” attached to U.S. chains like Stop & Shop.

Takeoff develops small warehouses that save space by stacking groceries to the ceiling, and use robot arms to put together shoppers’ orders. The warehouses can be used as small supermarkets that can supply several stores and cost about $3 million to build – less than the cost of a typical store revamp, according to Takeoff.

“Ahold is preparing for a major push,” said Curt Avallone, Takeoff’s chief development officer. “If it goes well, both from their side and our side, the hope is we would rapidly be able to build quite a few.”

Albertsons is also working with Takeoff on a more efficient system to assemble baskets of products for delivery orders. Companies such as Takeoff Technologies provide an automated packing solution to help grocers process orders more efficiently.

Beyond that, Walmart — one of the main rivals of Amazon, which will command an estimated 1.8 percent of U.S. consumer spending this year on food and beverages, according to PYMNTS research, up from 0.8 percent last year — said it would test the use of robots to help it fill online grocery orders quicker. The retail chain is working with the startup Alert Innovation to launch a pilot using the automated robot, which is being called Alphabot.

Robotic Growth

What’s behind the robotic push in grocery?

First, it’s a competitive industry with high volumes and relatively low margins, of course, so any edge gained — and robots can help a company, over time, save on labor costs and increase efficiencies — helps in that retail fight (a fight to which Amazon, via its fresh ownership of Whole Foods, quicker deliveries and other methods, is bringing more power).

Location also plays a role.

For example, Takeoff Technologies uses extra space in a grocery store to construct automated micro-fulfillment centers (a concept also suitable, in theory at least, for pharmacies, convenience stores and quick-service restaurants (QSRs). As one analysis put it: “The fact that the fulfillment centers are built inside existing stores means that grocers don’t have to set up a separate distribution center with [their] own inventory (and accompanying systems). Since people typically shop from a grocer that is already in their neighborhood, delivery or curbside pickup of orders are that much closer – and thereby faster to reach their destination.”

“I believe this idea is the future of grocery retailing,” Guizhou University of Finance and Economics Professor Gene Detroyer told RetailWire. “It provides the time saving and convenience that is the unstoppable trend of shoppers today, and more so tomorrow.”

According to that analysis, the rise of online grocery shopping also powers the robotic trend — that sector of eCommerce, in fact, is set to hit $100 billion by 2022. “This willingness to purchase even more food online from a generation of shoppers used to getting things on demand will make convenience and speed table stakes for anyone in the grocery game.”

The warehouse robotics market (not just for grocery), meanwhile, is expected to grow at a compound annual growth rate (CAGR) of 11.8 percent between 2017 and 2022. At this rate, by 2022, the warehouse robotics market will have grown to a value of some $4.44 billion.

Ocado Robots

A recent look inside an automated warehouse operated by Ocado — the U.K. online supermarket operator that earlier inked a deal with Kroger for entry into the U.S. market — gives an idea of what the robots can do. In Ocado’s case, they can pack 65,000 grocery orders each week, and they run on battery power and plug in at charging bays. Humans still have a role — at picking stations, where robots drop off items, people assemble orders for shipping. As another report noted, not all the technology in that warehouse is “ready for prime time yet, but Ocado says robots like (the ones in that U.K. location in Andover) should be integrated into its warehouses in the coming years.”

Food and grocery retail is undergoing significant transformation and disruption, including in delivery and via mobile commerce. Add robot logistics to those developments, which promise to continue changing food and grocery sales — and the competitive landscape — in the coming years.

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