verticalfocus
are grocers ripe for
After years of
holding out, a few
automation?
big grocers have
reversed course and
begun automating
their DCs. Now the
question is, will
others follow suit?
WHEN IT COMES TO WAREHOUSE AUTOMATION, THE U.S. GROCERY
industry has long been the final frontier. For decades, grocers’ warehouses and distribution centers remained untouched by the wave of automation sweeping
through the nation’s DCs. While pharmaceutical, electronics, and consumer
goods facilities all around them installed the latest automated material handling
systems, grocers clung to their manual ways.
Although there were some technical obstacles, the reasons were largely financial.
In a business known for its paper-thin margins, automation simply wasn’t seen as
a justifiable expense. “[Grocers] have such a low-margin business, they tend not
to put their investment in warehouse technology,” says Jeff Waller, president of the
Atlanta consulting firm Waller & Associates. “They put it in the storefront.”
But now that’s starting to change. Within the past five years, several large grocers, including Kroger Co., HEB Grocery, and Stop & Shop Supermarket Co., have
embarked on projects to partially or fully automate some of their distribution
centers.
As for what’s behind the reversal in thinking, it’s partly the prospect of long-term labor savings. On top of that, the grocers say they stand to benefit from
improved picking accuracy, a reduction in product damage, and higher throughput. But the fact remains, automated systems represent a hefty investment. And
while some big players may have capitulated, it’s still anything but clear whether
their smaller counterparts will follow their lead.
