Whole Foods ware­houses seen as ideal turf for ro­bots

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - SPENCER SOPER AND ALEX SHER­MAN

When Ama­zon’s $13.7 bil­lion bid to buy Whole Foods was an­nounced, John Mackey, the gro­cer’s chief ex­ec­u­tive of­fi­cer, ad­dressed em­ploy­ees, gush­ing about Ama­zon’s tech­no­log­i­cal in­no­va­tion.

“We will be join­ing a com­pany that’s vi­sion­ary,” Mackey said, ac­cord­ing to a tran­script of the meet­ing. “I think we’re gonna get a lot of those in­no­va­tions in our stores. I think we’re gonna see a lot of tech­nol­ogy. I think you’re gonna see Whole Foods Mar­ket evolve in leaps and bounds.”

A ma­jor ques­tion about the ac­qui­si­tion is what Ama­zon’s tech­nol­ogy will mean for those Whole Foods work­ers. Will it make their jobs ob­so­lete?

Ex­perts say the most im­me­di­ate changes will likely be in ware­houses that cus­tomers will never see. That sug­gests that the jobs that could be af­fected the ear­li­est would be in the ware­houses, where prod­ucts from sup­pli­ers await trans­port to store shelves, said Gary Hawkins, CEO of the Cen­ter for Ad­vanc­ing Re­tail and Tech­nol­ogy, a Los An­ge­les non­profit that helps re­tail­ers and brands in­no­vate. As Ama­zon looks to au­to­mate dis­tri­bu­tion, cashiers will be safe — for now.

Ama­zon sees au­to­ma­tion as a key strate­gic ad­van­tage in its over­all gro­cery strat­egy, ac­cord­ing to com­pany doc­u­ments re­viewed by Bloomberg News be­fore the Whole Foods ac­qui­si­tion was an­nounced.

Whole Foods has 11 dis­tri­bu­tion cen­ters spe­cial­iz­ing in per­ish­able foods that serve its stores. It also has seafood pro­cess­ing plants, kitchens and bak­eries that sup­ply pre­pared food to each lo­ca­tion. Those are the places where Ama­zon could ini­tially fo­cus, ac­cord­ing to ex­perts.

Adding ro­bots to ware­houses hasn’t dented Ama­zon’s hir­ing. The com­pany had 351,000 em­ploy­ees at the end of March, up 43 per­cent from a year ear­lier. CEO Jeff Be­zos in Jan­uary pledged to hire 100,000 more work­ers over the next 18 months, co­in­cid­ing with pres­sure from Pres­i­dent Donald Trump on U.S. com­pa­nies to cre­ate jobs.

Ama­zon has not had the fresh food sales vol­ume to jus­tify big in­vest­ment in re­frig­er­ated ware­houses. Whole Foods gives them an in­cen­tive to rein­vent how gro­ceries get to con­sumers’ stores and doorsteps.

Brit­tain Ladd, a sup­ply chain con­sul­tant who spent two years work­ing on Ama­zon’s gro­cery push, said Ama­zon may be considering build­ing a net­work of au­to­mated ware­houses de­signed for the gro­cery busi­ness. These would likely be 1 mil­lion square feet — large enough to serve Whole Foods and Ama­zon’s var­i­ous other gro­cery ini­tia­tives like Ama­zon Fresh and Prime Pantry — and would uti­lize ro­bots and au­to­ma­tion to re­duce la­bor costs, he said.

“The goal will be to cre­ate as ad­vanced a dis­tri­bu­tion ca­pa­bil­ity as pos­si­ble to pro­vide cus­tomers with ex­cep­tional ser­vice and the fresh­est of fresh pro­duce, veg­eta­bles, and meat,” Ladd said. “Ama­zon will win the bat­tle against Wal-Mart by win­ning with fresh food.”

A big chal­lenge for Ama­zon will be ap­ply­ing its lo­gis­tics know-how re­gard­ing durable, long-last­ing prod­ucts like books, toys and tablets to del­i­cate per­ish­ables like straw­ber­ries and steaks that have to be han­dled gin­gerly, stored at dif­fer­ent tem­per­a­tures and in­spected fre­quently for signs of spoilage.

Af­ter au­tomat­ing ware­houses, Ama­zon may in­tro­duce ro­bots in the stores. But don’t ex­pect them to re­place cashiers im­me­di­ately. The first ones will likely nav­i­gate aisles to check in­ven­tory and alert em­ploy­ees when items run low, said Austin Bohlig, an ad­viser at Loup Ven­tures, which in­vests in ro­bot­ics star­tups.

“These ro­bots can op­er­ate along­side peo­ple in­side a store, but Ama­zon will want to make ab­so­lutely sure they are safe,” he said.

Ama­zon said it has no plans to in­tro­duce that tech­nol­ogy to Whole Foods, though a per­son fa­mil­iar with the mat­ter said the com­pany is considering elim­i­nat­ing cashiers as part of its long-term gro­cery strat­egy. The per­son asked not to be iden­ti­fied be­cause he was not au­tho­rized to speak on pri­vate mat­ters.


A worker at a Seat­tle Ama­zon Go store, cur­rently open only to Ama­zon em­ploy­ees, is seen through an ex­te­rior win­dow as he cuts up chicken ear­lier this year.

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