This is not your father’s retail fulfillment center

Robots, customer-centric delivery hubs, and micro-fulfillment are transforming the traditional retail fulfillment center model.

Much attention has been paid to the “store of the future,” but retailers are also rapidly adopting technologies that are re-inventing the staid operations of the fulfillment center. Larger retail trends that have been magnified due to the impact of COVID-19 are filtering down to the fulfillment center. These include consumers’ move toward e-commerce, as well as desire for a more personalized, segmented customer experience.

The “fulfillment center of the future” retailers are creating to serve these new supply chain needs is still taking shape. However, a few early trends are already having a major impact on how retailers run their warehouses. 

Robots
Faced with an unprecedented surge in online orders and significant workforce disruption caused by the COVID-19 pandemic, an increasing number retailers have been relying more on robots to perform repetitive, monotonous, lower-skill tasks for e-commerce fulfillment.

Specialty apparel retailers Gap Inc. and American Eagle Outfitters have been scaling their picking and packing operations for online orders with the Sort smart robotic solution from Kindred. Sort piece-picking robots utilize AutoGrasp, a robotics intelligence platform that identifies and singulates items to pick and place into an automated putwall. 

Meanwhile, global grocery conglomerate Ahold Delhaize is piloting a robotic solution for disinfecting air and surfaces in two of its U.S. supply chain facilities. 
Retail Business Services (RBS), the services company of Ahold Delhaize USA, is testing newly-launched ultraviolet (UV) robots from Ava Robotics in two of its affiliated distribution centers to support enhanced cleaning procedures during the COVID-19 pandemic. 

Customer-centric supply chain hubs
It’s no secret that retail is becoming a more customer-centric industry. Retailers are promising shoppers the products they want, when and where they want them. To fulfill that promise, retailers are creating highly specialized supply chain hubs designed to meet the needs of specific customer segments.

In time for the 2020 holiday season, Walmart created “pop-up e-commerce distribution centers” to fulfill home delivery orders. The discount behemoth took space in 42 of its existing regional distribution centers (RDCs) across the U.S. and created pop-up e-commerce distribution centers, or eDCs, to meet its growing demand for delivery of online orders directly to customers. 

After the holiday, Walmart’s eDCs will have the flexibility to scale up and down, and the company says it will apply lessons learned to further evolve the supply chain network in the future. 

Micro-fulfillment
One of the hottest current trends in automated retail fulfillment technology is micro-fulfillment. Primarily found in the grocery and CPG verticals, micro-fulfillment uses small-scale warehouse facilities located in urban areas to operate same- or next-day delivery order fulfilment. 

“Micro-fulfillment centers allow for high-density product storage and use shuttle systems or other forms of material handling automation to put away and retrieve products for consumer orders at high speed,” Tom Enright, VP and analyst with Gartner, told Chain Store Age. “The model is a goods-to-person style of automation and robotics, where the human stays in one place and automation delivers the goods to be picked to them.”

Retailers including Walmart, Albertsons, Loblaw, H-E-B, FreshDirect, and goPuff are all utilizing micro-fulfillment technology.