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Senior Analyst – UK
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With a background in computational biology, Rueben Scriven joined Interact Analysis two years ago and leads the warehouse automation and on-highway commercial vehicle research areas. Rueben has spoken at some of the leading industry events and moderated several panel discussions on the topic of commercial vehicle electrification. He’s also appeared on CNBC to provide insight on the global electric bus market.

In our latest in-depth report on automation, our experts at Interact Analysis have focussed on warehousing, shining a light on key sectors such as groceries, general merchandise and food and beverage. This report looks at the period 2018 – 2024, using verified historical data and information collected by our analysts from industrial planners through (socially-distanced) face-to-face meetings and telephone interviews. It presents what we believe is an accurate assessment of where warehouse automation is now, and where it is heading. 

Our report covers all major warehouse automation market sectors. This insight is the first of a series looking at key aspects of our findings for warehouse automation within specific industry sectors. This week, we take a look at the general merchandise sector. 

Same Day Delivery Drives Creation Of Urban Micro-fulfilment Centres 

Whilst Amazon is a pace-setter in e-commerce, brick-and-mortar retailers are catching up, and they have a significant advantage in that they already have established premises close to customers. Approximately 90% of Americans live within 10 miles of a Walmart, for example. So, Walmart has seized the baton, converting its sites into microfulfilment centres offering same-day delivery, and even stealing Amazon’s prime clothes with its Walmart+ service offering customers free same-day shipping for items priced above $35.00. Of Walmart’s 4,756 US stores, 2,700 will soon be able to ship items on the same day they were ordered. In order to succeed in the same-day delivery race, Amazon will have to bring its fulfilment centres closer to the customer. 

Amazon Rolls Out 1,000 Delivery Hubs 

Amazon is undoubtedly the largest investor in warehouse automation equipment globally. In 2019 we estimate the company invested between $1.7bn and $1.9bn on warehouse automation solutions purchased from third party companies, i.e. not from its own Amazon Robotics company. COVID-19 will undoubtedly accelerate Amazon’s investments, but the interesting point to note is the company’s response to the challenge from brick and mortar companies such as Walmart. 

For example, in September 2020, Amazon announced that it would be opening as many as 1,000 new hub warehouses close to urban areas in a bid to reduce delivery times and compete with Walmart and Target’s real estate prowess. In terms of numbers of outlets, this will be a major step-up for Amazon, which currently has only 627 distribution centres and warehousing facilities. It’s likely that these distribution hubs will use automation solutions – most likely some form of sortation.  

Changing Distribution Models Lead To Changing Technology Demands 

As distribution and fulfillment models change, so too will the types of automation being used in warehouses. Modular and flexible systems, which can be used across many locations, especially within urban areas, will be a central requirement for retailers’ automation strategies – especially as they look to roll out automation across a large number of small urban locations. Retailers may want ‘cookie cutter’ solutions which can be copied and pasted across a large number of locations.  

Furthermore, whilst large, centralised warehouses are often greenfield sites, allowing for the outer building to be ‘moulded’ around the automation, urban warehouses will likely have to make do with existing and under-utilized industrial and retail real estate assets. Therefore, the types of automated equipment being used will have to operate within existing physical constraints. We’ve seen this in the grocery industry with the likes of Takeoff Technologies and Fabric, offering standardized and modular solutions which can be scaled according to the physical constraints of the buildings.  

New Technologies Abound 

Storage and buffering systems 

The threat of further lockdowns in response to COVID-19 and the growth in urban fulfilment centres have been market-drivers for a range of new automation solutions in general merchandise warehouses, the most significant being modular storage systems such as those manufactured by Autostore, which offer versatility and can be installed quickly within the confines of existing buildings.   

Sortation systems 

Although pouch sorters, such as Vanderlande’s AIRTRAXare currently used almost exclusively in the retail apparel sector, Interact Analysis forecasts a significant penetration of the technology into general merchandise warehouses. The system provides an extremely high degree of flexibility and allows retailers to handle same-day orders in a more efficient and cost-effective way. We forecast the market for pouch sorters within general merchandise will show a CAGR of 61% between 2019 and 2024.  

Piece picking solutions 

Dematic is a major player in the field of piece-picking robotics. This activity has traditionally been one of the most labour-intensive activities within the warehouse environment. As COVID-19 has placed the emphasis on social distancing in warehouses, with the resultant trimming of the human workforce, piece-picking robots within general merchandise warehouse settings have been recognised as being the answer. In 2019, the market for piece-picking robots within the sector was approximately $25m and we forecast a boom in this market.  Mujin and ABB combined have installed more than 14 piece picking robots within JD.com’s highly automated warehouses.  

A Complete Overview Of The Market 

Our report offers a complete analysis of the warehouse automation market, and we cover all sectors, from general merchandise to food & beverage, and manufacturing. Please get in touch to learn more. 

Keep an eye out for the next insight in this series, which will look at warehouse automation within the apparel sector. 

Posted by Rueben Scriven

Graduating from Durham University with a first-class degree in Biochemistry, Rueben is leveraging his background in science and computer modelling by joining our growing analyst team.