Walmart's Alphabot Robot Is The Beautiful First Letter Of A New Retail Language

From our 2018 files - Source article: Chris Walton @ forbes.com - Aug. 13, 2018

Walmart announced last week that it will begin deploying robots to help fulfill grocery pickup-up orders within it stores. While I have been critical of Walmart’s nearly every other week PR routine since Marc Lore came on board, this week’s announcement is big.

Walmart plans to partner with startup Alert Innovation to deploy "first of its kind automation to help associates fill online grocery orders faster than ever before." The robotic automation technology, what it calls Alphabot, will arrive via a test in one of its New Hampshire stores by the end of the current year. The plan is to utilize an adjacent 20,000 square foot warehouse extension to the store and to test robotic storage and retrieval of Walmart’s buy-online-pickup-in-store (BOPIS) and ship-from-store grocery orders.

Walmart should be applauded for this test. Three key observations stand out:

It's About Efficiency

The “New Retail” capabilities consumers require of retailers (e.g. BOPIS, curbside pickup, etc.) put a strain on legacy in-store operating models. All the jobs and tasks of the old operating model that require none of these activities still remain, but a retailer can only spread its workforce so thin to accomplish them, especially in light of payrolls also getting squeezed because traffic to physical stores has been harder to come by for retailers too.

Retailers, therefore, need automation solutions either to help out with these new tasks or to reduce the burden of the legacy tasks that still exist. Put simply, they need to eliminate operating expense lines or become more productive.

Walmart’s Bossa Nova Robotics automated shelf-scanning robot is a great example of another tactic Walmart is deploying to eliminate expenses related to legacy inventory counting practices.

Somehow, someway, productivity and labor expense reducing solutions need to be found, and the only way to get there is for a retailer to have the guts to test their way into them. Alphabot is a great first step to make the new world of online order pickup and ship-from-store faster and more efficient.

It's About Micro-Warehousing

Walmart's plan to use an adjacent warehouse space for this test indicates that Walmart may be thinking hard about the concept of micro-warehousing. The idea of micro-warehousing is that store backrooms are not only stockrooms for salesfloor replenishment but also small warehouses from which retailers can make local direct-to-consumer deliveries, in or out of store.

Micro-warehouses provide a number of benefits:

First, micro-warehousing enables retailers to fulfill online orders faster and more efficiently. It enables them to get faster turns on their inventory within stores and puts the inventory closer to the consumer for last-mile delivery. Robotics and automation technologies have long been a part of warehouse operations. Bringing the principles of these technologies to smaller warehouses attached to or as part of stores themselves will, over time, allow retailers to get these operations to run as close to warehouse financials as possible.

Second, micro-warehousing over the long-term could be one of the keys to unlocking the Bonobos guideshop model at scale. Bonobos, whom Walmart acquired last year, was one of the pioneers in guideshop retailing. The simplest way to think about the Bonobos model at scale, or deployed in a mass merchant setting, is to imagine IKEA, but, instead of the consumer having to pick his or her own products at the end of the experience, a warehouse full of automation tech and/or robots does the work for the consumer.

From a consumer standpoint, this Bonobos/IKEA fusion would be awesome. It would free them up to shop and have products delivered wherever and however they wanted. The entire world would become like an e-commerce doorstep for these micro-warehouse type operations. The long-lines of IKEA checkout would go away, and consumers would instead have their product waiting for them at the exit of a store, waiting for them at their cars, at home, or pretty much anywhere a micro-warehouse could ship.

From the retailer perspective, the micro-warehouse model would also mean far better inventory accuracy and far more efficient operations too. Instead of inventory constantly moving from front of house to back of house and into and out of consumers' hands, inventory instead would be 100% “bifurcated” (my term), meaning physical retail operations could begin to work at inventory accuracy levels in the 90% range rather than the 60% range they are today.

With this increase in accuracy would come less errors in BOPIS and ship-from-store fulfillment, more direct-to-consumer-fulfillment (because retailers could trust their systems better), and more efficient salesfloors sets and resets because retailers would no longer have to deal with as much inventory on their salesfloors as before.

IKEA has benefited from the principles of this "bifurcation" philosophy for years. Automation technology and shop-and-go technology is now evolved enough that other retailers could start to deploy this concept within their own current operating models as well.

In a manner of speaking, what was once old with Service Merchandise could soon become fresh and new again, and unlocked for far greater potential via technology.

It's (Possibly) About The Future

For the reasons mentioned above, this Alphabot experiment indicates that Walmart is willing to experiment with the future. The true validation of the extent of Walmart's future visions will lie in whether this test is merely just a test to facilitate grocery pickup, micro-warehousing, or something far more significant.

Walmart's Project Kepler has been mentioned but kept decidedly out of the news. Walmart has talked about everything from VR galas to messaging concierge services for the upper crust of Manhattan, but curiously, Project Kepler, its store of the future project, has been kept quiet. Thus far all the industry knows is that it may entail cashier-less checkout, a la Amazon Go.

I am anxious to see if the reports are true or if Project Kepler will be something more game-changing. Amazon Go is not that hard to replicate. It has been done already overseas (see BingoBox). What would be really impressive is if Project Kepler also employs the principles of micro-warehousing and guideshop merchandising at larger square footages. If the Alphabot New Hampshire test is Walmart's step one in a greater plan towards its Kepler implementation, then hitch me up to the Walmart wagon.

The name, Alphabot, may sound squirrelly, like the name of something a few engineers after a few packs of Red Bull and a Halo all nighter might derive, but, for all the reasons given above, it could actually become something far more beautiful and symbolic.

The retail industry needs a new language, a language for how to get things done in a world where consumer expectations are changing rapidly. Terms like robotics, automation, guideshopping will all become part of the future lexicon, but it will take someone with the guts to pen the first letter of this new alphabet and to define how and what all these feathery words, working together, actually mean in practice.

Kudos to Walmart for having the guts to raise its hand and be one of the first to speak this new language in public.

Kudos to its new Alphabot.

Source article: Chris Walton @ forbes.com - Aug. 13, 2018