When you think Amazon, one of the first things you think of is probably the company's innovations in tech. From being an early leader in e-commerce game and holder of a wide array of tech-focused patents, to its state-of-the-art distribution and robotics operations, Amazon knows what it’s doing in this arena. So, now that the company has acquire grocery retailer Whole Foods, what new innovations will our industry see piling in? According to a new report by Bloomberg, think robots.
"We will be joining a company that’s visionary," said Whole Foods’ Chief Executive Officer John Mackey, according to a transcript of an address to his employees. "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.”
Amazon’s technological advancements were certainly an important part of what made their acquisition offer so attractive. In its recent piece, Bloomberg called on experts who say the most immediate changes Amazon would bring from this arena is likely to be in the company’s warehouses.
"The easiest place for Amazon to bring its expertise to bear is in the warehouses, because that's where Amazon really excels," shared Gary Hawkins, CEO of the Center for Advancing Retail and Technology, according to the source. "If they can reduce costs, they can show that on the store shelves and move Whole Foods away from the Whole Paycheck image."
Automation is one of Amazon’s key strategic advantages over some of its less techy grocery counterparts, but it has barely scratched the surface as far as automation for perishable items such as produce. Amazon employs the use of robots in its vast network of distribution centers, but can this method translate to the same success in a landscape where you must have a touch gentle enough to not destroy, say, a loaf of bread, but strong enough to transport a pallet of massive deli meats?
A big challenge for Amazon, Bloomberg says, will be applying these logistical tools previously focused on durable products like books and toys to delicate perishables that require a gentle touch and a highly controlled temperature.
As we touched on in our previous article, experts said Amazon’s warehouse space for fresh distribution is not where it needs to be to compete with other major retailers that have been building their U.S. presence in the market over the last 10+ years. This Whole Foods deal now gives them an incentive to reinvent its methods on how groceries in the future will be distributed.
Brittain Ladd, a supply chain consultant who spent two years working on Amazon's grocery push, told Bloomberg that Amazon may be looking towards a network of automated warehouses for its grocery operations. The source suggests this would likely mean 1 million-square-foot facilities—large enough to serve businesses including Whole Foods, Amazon Fresh, and Prime Pantry. Ladd said these would most likely utilize robots and automation.
"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.”
While we’re still in the very preliminary stages of uncovering just what an Amazon-tinged grocery retail environment might look like, all signs point to a promising future.