Business

Walmart will speed up auto-fulfillment in its shops as the net grocery retailer grows

A worker collects shopping carts at a Walmart store on May 19, 2020 in Chicago, Illinois. Walmart reported a 74% increase in online sales in the US for the quarter ended April 30 and sales in the same store 10% increase over the same period that the effects of the coronavirus contributed to the increase in sales.

Scott Olson | Getty Images

Walmart said Wednesday it plans to expand the use of high-tech systems that allow online grocery orders to be picked and packaged quickly, as it expects customer demand for pickup and delivery will outlast the pandemic .

Dozens of Walmart stores are becoming local fulfillment centers, with some of those stores being converted into small, automated warehouses, the company said. To achieve this, Walmart either uses a store’s existing footprint or extends it.

In 2019, Walmart began testing a system called the Alphabot at its Salem, New Hampshire store, and results were immediate. The system enabled the retailer to pick orders within minutes and have them ready for a customer within an hour of placing the order.

As Walmart automates more stores, it is trying different configurations and partnering with multiple technology providers including Alert Innovation, Dematic and Fabric. Some stores will have a pick-up area where customers and deliverers can pull up, scan a code, and retrieve their order, said Tom Ward, senior vice president, customer products at Walmart US

Walmart declined to say how many stores would get the technology or how much it would spend on the upgrades. The investment, however, is an integral part of the country’s largest grocer’s hope to fend off competitors like Amazon’s FreshDirect, Kroger and Ahold Delhaize, who are competing for customers on same-day availability, speed and price.

For customers, the addition of Walmart to these high-tech systems could ultimately mean that they can more easily secure a same-day delivery or pick-up point and have this food ready more quickly.

Automated fulfillment

Rather than relying on the store staff to pick up every can of soup or other item a customer wants, the local fulfillment centers will combine machines and labor. When an order comes in, automated bots move up and down left and right to get items from chilled food into the electronics and take them to an employee at a picking station to help with assembly. At the same time, personal shoppers handpick fragile or unwieldy items like fresh seafood, meat and produce, or bulkier items like a big screen TV or a packet of paper towels.

Walmart will expand the use of a high-tech system that enables online grocery orders to be placed. In a small warehouse in some stores, automated bots pick up popular items while personal buyers pick up tricky items like products from the retail floor.

Walmart

During the pandemic, Walmart and other retailers saw an increase in demand for online grocery delivery. Walmart’s pickup and delivery growth peaked at 300% and its new customers for the services quadrupled in the early days of the health crisis. In response, Walmart increased slot capacity by 40%.

A Walmart + advantage

But even if customers are comfortable returning to stores, they may be looking for online delivery. Walmart has made unlimited grocery deliveries a key benefit of Walmart +, its new membership program that could drive larger order volumes and increase customer expectations.

“We don’t see any further changes to these services in the future,” said Ward. “We anticipate that we will continue to serve more and more customers who rely on pickup and delivery to be an important part of their lives.”

Online grocery orders have put grocer profits under pressure even in the notoriously low-margin business. It has forced them to pick, pack, and ship orders that customers usually retrieve and transport themselves.

Ward said local fulfillment centers are another way to leverage the 4,700+ stores located near customers’ homes as a competitive advantage. He declined to provide details of potential cost savings.

New avenues have already been explored in compact fulfillment centers in various parts of the country, including the Dallas area and hometown of Bentonville, Arkansas, he said. Each not only serves their own store, but also fulfills orders that have been picked up at other nearby stores.

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