Woolworths building a robot army for delivery blitz

Woolworths chief executive Brad Banducci hopes he can beat Amazon at its own game.

Woolworths’ Carrum Downs store leverages its massive floor space with state-of-the-art technology. Picture: Leigh Henningham

Woolworths chief executive Brad Banducci hopes he can beat Amazon at its own game by developing a decentralised network of micro-fulfilment supermarkets that pick, pack and dispatch groceries to consumers within a day.

Where once the legacy of thousands of bricks-and-mortar stores was viewed as a weakness or dead weight in the new world of online shopping, the Woolworths CEO is hoping to transform some of his neighbourhood stores into their own tech hubs that could double as distribution centres to sort and move products ordered online.

It’s all about opening the time windows that Woolworths can deliver fresh groceries to customer homes, including highly coveted same-day delivery.

What Mr Banducci is creating is two stores in one. At the front it’s an ordinary store, but out the back it’s a technology-driven assembly line with staff and robots feeding delivery vans that, for Woolworths, could be the winning hand to take on the likes of Amazon.

Mr Banducci calls the strategy a “game changer”.

“What we are trying to do is reinvent the store of the future, and the store of the future should be able to provide a great in-store shopping experience plus also meet customer needs for pick-up or home delivery,’’ Mr Banducci told The Australian as he opened Woolworths’ first e-commerce floor located at the back of its existing Carrum Downs supermarket in Melbourne.

It is the first of four micro-fulfilment stores Woolworths has planned: two will be situated in Australia, and two in New Zealand. Woolworths is the first retailer in Australia to deploy the tools developed by US-based company Takeoff Technology.

It will see more than 150 team members hired to operate the newly built site within Carrum Downs supermarket. The micro-fulfilment tech is expected to helping dispatch five times the online order volume of a standard Woolworths store.

Moving away from the more concentrated retail e-commerce models, such as those employed by US giant Amazon and its spaceship-sized distribution zones set out deep in industrial zones, Woolworths could plant these micro-fulfilment centres all across suburban Australia, bringing its online shopping centres closer to where consumers live.

Wooloworths chief executive Brad Banducci. Picture: John Feder

“As customer expectations continue to rise, we’re investing in new technology to keep pace with the growth and focusing on building an ever more convenient ­online offer,” Mr Banducci said.

“The micro-fulfilment technology in this Carrum Downs eStore is a potential game-changer. It will help us deliver unparalleled speed and accuracy in the online picking process while keeping us close to our customers for faster and more flexible deliveries.

“This speed and proximity is key to boosting the availability of the same-day deliveries more and more of our customers want, given their busy lives.

“We do believe customers will want ‘same-day’ as a key part of what they want in the future.”

The retrofitted Carrum Downs store leverages a 2400sq m space with state-of-the-art technology to sort and move products from automated storage units directly to team members hand-picking customer orders. These units can hold up to 10,000 of the most in-demand grocery products ordered by Woolworths shoppers, while fresh fruit and vegetables and meat will continue to be collected from the shopfloor.

The genius is in the layout, with the front of store and back of store linking arms to serve customers walking down the aisle as well as shoppers surfing for fresh food and groceries online. Rather than building a stand-alone warehouse and distribution centre specifically catering to online orders, it sits on the back of a fully operating physical store.

“Importantly, the eStore layout also helps reduce congestion in the aisles for our in-store customers, as our personal shoppers pick most items in the back of house,’’ Mr Banducci said.

The reach for better efficiencies is crucial when you consider the huge volumes of online orders Woolworths is now handling.

The retail giant’s online orders have more than doubled in Victoria during the COVID-19 pandemic, and throughout Australia there has been a massive pivot to online shopping as consumers have remained at home.

Mr Banducci said the first four micro-fulfilment stores would allow Woolworths to evaluate and hopefully validate its strategy of taking online shopping hubs deep into suburbia.

“We will use these as learning opportunities to see how we proceed. It will depend on how those four go, but what we are really trying to validate is the ability to put in micro-fulfilment centres as close to customers as possible so that we can give them a great same-day home delivery.”