The Retail industry has had to pivot fast this year – having faced early supply chain disruptions, social distancing restrictions due to COVID-19, uncertain demand and falling margins. But the biggest challenge faced was the evolved consumer buying behaviour. Customers were forced to go online, and eCommerce platforms thrived even through the difficult times. Retailers have to continue to cater to this shift in buyer behaviour.
As retailers continue to evolve their capabilities, Woolworths, the Australian chain of grocery stores, recently announced that it has launched new micro automation technology for one of its eCommerce facilities located in Melbourne to speed up the fulfilment of online grocery orders. In 2019 Woolworths had partnered with a US based eGrocery startup, Takeoff Technologies.
Woolworths Automates Dark Store
Woolworths eCommerce floor space spanning across 2,400 sqm is equipped with micro automation technology that allows it to segregate and move groceries from automated storage units that can hold an inventory of 10,000 products and bring them directly to those you pick the orders. The innovative model is designed to make the inventory storage space compact and move high-volume online grocery products to consumers with greater speed, efficiency and accuracy. While grocery products will be picked from automated units, perishables such as fruits, vegetables and meat will continue to be picked up by shop floor workers. Woolworths has employed 50 new employees to fulfil online orders and is expected to fill 100 more vacancies.
“It appears that Woolworths is continuing to use New Zealand to test new technology before introducing it into their much larger Australian market. They are extending the introduction of the technology they first announced for use in their New Zealand online fulfilment centres – the Auckland dark store in November 2019 with a second in Christchurch announced in January 2020,” says Ecosystm Principal Advisor Alan Hesketh. “The Carrum Downs, Melbourne, store will be the first implementation of automation in Australia. Woolworths has announced a third dark store for Wellington in late September 2020 – it would be surprising it was not automated as well.”
Talking about the increase in the use of dark stores, Hesketh sayss, “The challenge with the current model of online stores is the use of expensive retail floor space for picking orders that cannot be used to serve physical customers. With the increase in online sales, accelerated by COVID-19, the volumes are now sufficient in urban areas to make these dark stores profitable. This allows the use of lower-cost, centralised, distribution central space for the dark stores.”
An Example of how Retailers are Pivoting Successfully
Woolworths has been constantly developing their capabilities to improve customer experience and process efficiency. The demand for online products and groceries skyrocketed during COVID-19 which resulted in a temporary shortage of online products and Woolworths had to temporarily stop online ‘Pick up’ and ‘Delivery Now’ orders nationally. To ensure smoother delivery services, they partnered with Sherpa, Drive Yellow, and Uber. Earlier this month, Woolworths announced that six stores in Australia would go completely cashless. Woolworths has around 1,050 stores in Australia which operates on a mix of cash and e-payments.
To keep pace with the online growth, Woolworths automated dark stores will be a potential game changer as they are expected to be able to dispatch online orders five times faster, compared to a standard Woolworths store.
“This increased capacity also means Woolworths’ online offer is less likely to be overwhelmed in the event of another COVID-19 lockdown. This improved access to groceries will be an important benefit to vulnerable members of communities, as well as those customers wary of visiting physical stores,” says Hesketh.
“For their physical stores that support home delivery, Woolworths will now be able to repurpose or release the space used by the pick-and-pack operations. In-store customers will get a better experience without the Woolworths personnel picking orders in the aisles.”
