Retail’s robotics reboot

Walmart and Amazon are among the retailers acquiring warehouse robotics firms, during a period of significant innovation in this space

It felt apt for retail warehouse robotics to be on prominent display at Manhattan Associates’ Exchange 2022 event in Berlin from 10 to 12 October.

Packing, sorting and collaborating robotics machines were working away in the foyer of the Kosmos conference centre, displaying their capability to the hundreds of retail delegates wandering around the site. Their presence was a timely reminder of a big trend in retail warehousing.

Less than one week before, Walmart had announced “a step forward” in its technology investments and the evolution of its supply chain by acquiring robotics automation company, Alert Innovation.

Following significant tech-led investment in regional distribution centres and fulfilment sites over the past few years, the US grocer and marketplace agreed to acquire Alert to support its already significant expertise in that space.

Alert develops material-handling technology for automating order fulfilment in retail supply chains. The acquisition comes after the two businesses spent the past six years working together to customise technology for Walmart’s market fulfilment centres (MFC).

The MFC network Walmart has developed – making its stores technology fit for online fulfilment of orders – will now be strengthened, according to the retailer. Such investment is good for the customer proposition and more efficient for the staff tasked with serving online shoppers from stores, the company said.

David Guggina, senior vice-president of innovation and automation at Walmart US, says the first MFC using bot technology from Alert was piloted in 2019.

“The bot technology is notable within the industry, due to its fully autonomous bots that store, retrieve and dispense orders by moving horizontally, laterally and vertically across three temperature zones without any lifts or conveyors,” he explains. “This provides fewer space constraints inside the MFC and eliminates the need to pause the entire system for bot maintenance.”

Guggina suggests the arrival of the Alert team will enhance the existing Walmart robotics and engineering departments, and he promises Walmart will continue to modernise its supply chain operations through further investments in robotics and automation in both stores and the wider distribution network.

Amazon shaking things up again

The technology on display in Berlin, representing some of the systems that align with Manhattan’s ever-evolving suite of warehouse management technology, was from Locus and Exotec. Zebra Technologies – which has its own robot technology after acquiring Fetch Robotics last year, but did not display it in Berlin – also had a presence in the Kosmos hall.

These businesses’ existence in the industrial robotics market is partly a result of the first wave of retailer robotics consolidation, which started in 2012 when Amazon acquired Kiva Systems for a deal worth around $775m. Other companies that used Kiva robotics in their warehouses at the time were soon faced with working with a newly created Amazon Robotics division or seeking tech expertise elsewhere, with the latter becoming the more favoured option.

That created fertile ground for new robotics companies looking to fill the gap Kiva left behind. These startups wanted to help the wider retail industry become more efficient in the supply chain and a plethora of businesses cropped up across the globe.

Eddie Capel, CEO of Manhattan, says of the robotics advancement in recent years: “There’s terrific innovation in academia and industry, and a blend of both. We’re agnostic to them all. There is a best fit case for each type of robot in the warehouse and a blend of a number of them in a distribution centre is not uncommon.”

Locus, in fact, was founded specifically in answer to the Amazon-Kiva situation by a Kiva-using distribution centre owner. It uses a fleet of robots integrated into current warehouse management systems to provide robotic platforms to carry picked items to a conveyor or to the packing station. Locus says this reduces human walking distances and improves overall picking efficiencies.

Exotec, meanwhile, runs the Skypod order picking system which includes robots that can climb racks up to 12 metres in height and retrieve products autonomously, before delivering totes to human-staffed or automatic picking stations. Its technology is used by companies such as Gap, Fast Retailing-owned Uniqlo, and Decathlon.

It was rewarded with the Manhattan Associates Partner Innovation Award 2022 during the event in Berlin, elevating its status yet further within the supply chain community and showing how the robotics field is increasingly important for retailers.

The prominence of the retailer-focused robotics at Exchange comes during a time when major retailers are acquiring robotics firms again. Walmart’s Alert deal came just a month after Amazon went on another shopping spree, this time in Europe.

In September, it announced it was acquiring Belgian company Cloostermans, a textile machinery business which has been around for a century and has been supplying Amazon with robotic logistics devices since 2019 after branching out into modern mechatronics.

Amazon said at the time of the deal that Cloostermans would help it “deploy new solutions more quickly at our sites to improve the working conditions of our employees and help reduce our waste”.

One year before, fashion retailer American Eagle in the US, paid $350m for Quiet Logistics, which operated a network robotic-led distribution centres in Boston, Chicago, Los Angeles, Dallas, St. Louis, and Jacksonville.

Retailers are clearly identifying benefits in taking ownership of the latest robotics technology around.

Labour costs and shortfall

So, what is going on? Why the acquisitive activity in the robotics space? Computer Weekly put that question to those at Exchange, and the key response was that rising employment costs and limited warehouse labour availability are the driving factors.

Simon Jones, senior sales executive in UK and Ireland for Exotec, said the main reason retailers are investing in robotics technology is because of “labour shortages and cost of labour” but also due to storage space restrictions.

“Every warehouse you go to they’ll tell you they can’t get enough staff,” he says. “Land is so expensive too so you need to maximise floor space.” That lends itself to automation that can be built upwards in warehouses as opposed to simply on the ground floor as retailers look to get the most out of their real estate to serve burgeoning multichannel operations.

But he counters that retailers “don’t need to buy robotics companies”, with suppliers of this technology able to work with retailers in a tailored fashion and allow them to scale the system as they wish.

“No-one can forecast sales in five years’ time – retailers want systems for what they require today in terms of capacity, but [they also want the chance to] improve it,” Jones adds. “Robots can be brought in for peak period and then taken out again, too.”

Steve Simmerman, head of global alliances at Locus, describes American Eagle’s 2021 acquisition of Quiet Logistics as “a brilliant strategic move” as it allowed the business to instantly accelerate its own technical capability.

“Can you imagine how long it would take to design, build, and automate six DCs? [Instead,] they did it overnight,” he says.

Simmerman agrees with the notion that the global shortage and rising cost of labour is a reason for retailers’ growing focus on robotics in the warehouse, adding temporary staff are “not very reliable”. And in a time of “so much growth in e-commerce”, he says it makes sense to build robust systems to support it.

American Eagle also has the added benefit of becoming a third-party logistics provider as a result of its acquisition. The wholly owned American Eagle subsidiary created as a result of taking on Quiet Logistics is quite simply another revenue stream for the retailer.

Stage set for more robotics

Conversations with retailers and suppliers at Exchange indicate the influence of robotics in the warehouse is only going in one direction and will escalate rapidly in the next five years.

During a presentation on stage, Michael Ray, senior alliances manager at Zebra-owned Fetch, described coupling robotics with Manhattan’s warehouse management software as “a gamechanger”. Like Locus, Fetch’s robots are designed to work alongside employees and increase efficiency by ensuring staff do not have to walk as far.

Manhattan says its own evolution to a microservices IT architecture in recent years makes it easier for its retailer and manufacturer customers to add robotics capability where it is needed. Its new product-led approach to technology development enables a raft of new solutions to come to market and be available to its customers every 90 days, Capel said during his keynote speech.

The current course of innovation would have to divert quite significantly for that not to include more robotics-led warehousing solutions.

Amazon said in September that it has added 550 new pieces of technology to its fulfilment centres across Europe in the past three years, including “large robotic arm” pallet movers that eliminate the need to use forklifts to carry pallets, and automatically move multiple items from one location to another.

Machines that lift totes before placing them on conveyors automatically, as well as automated guided vehicle support robots that drive around its site carrying items for people are also among that additional tech innovation in its warehouses, it explained.

And what Amazon is doing is being replicated at Walmart, and seemingly – from evidence at Manhattan Exchange – the wider retail industry, which continues to show a thirst for allowing machine to sit alongside human in the name of more efficient fulfilment.

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