Woolworths Expanding its Automation to Scale Up Online Groceries

• Woolworths will build an automated warehouse in Western Sydney with a capacity to fulfill 50,000 online deliveries a week.

• It comes as the Australian grocery giant reported it saw online sales skyrocket 92% in the last six months of 2020.

• Woolworths launched its first automated micro-fulfillment center in Carrum Downs in 2020, holding 10,000 of the most in-demand grocery products and offering next day deliveries.

• Woolworths had plans to open more micro-fulfillment centers in 2021, but instead is now building a larger, more automated, central facility with the ability to offer same day deliveries.

Grocery giant Woolworths is building a new automated warehouse in Sydney’s western suburbs, as it gears up for more of its customers doing their weekly shop online.

The move comes following soaring demand for home-delivered groceries over the past 12 months across Australia’s supermarket sector, as the pandemic forced more housebound shoppers online.

Both Coles and Woolworths have reported a signifcant spike in digital sales, with Woolworths’ nearly doubling from July through to December to $1.8 billion, or nearly 8 per cent of its total sales.

WooliesX boss Amanda Bardwell is preparing for a permanent shift towards online shopping.CREDIT:

Amanda Bardwell, the managing director of Woolworths’ WooliesX online division, said that the company had brought forward its plans to build the warehouse on the back of last year’s e-commerce gold rush.

“We know that there has been a permanent shift in the way that customers shop,” she said. “So we want to make sure our network is set up to best serve our customers going forward.”

The 22,000 square metre fulfilment centre will be located in Auburn, NSW, and will employ about 250 people on its planned completion in 2024. Woolworths will spend about $100 million to build the facility, which the company hopes will dispatch 50,000 home delivery orders a week.

Ms Bardwell said shoppers were putting greater emphasis on getting their items either the same day or the next day, requiring Woolworths to move away from its system of shipping orders directly from individual stores for high-density areas such as western Sydney.

“Our store networks are always going to be our first port of call,” Ms Bardwell said. “But when we have in some of these high-density areas like Western Sydney where we’ve got 2 million residents ... we want to supplement that network with some additional capacity from a dedicated and automated fulfilment centre.”

Woolworths is partnering with an European automated company to build the robotic warehouse, which is still subject to approval from the NSW Department of Planning.

The supermarket giant is experimenting with a range of systems to help fulfil its online orders, with a handful of stores trialling a ‘micro-fulfilment’ model where orders are completed via small distribution centres that are built into the back of existing Woolworths stores. However, the majority of orders are still completed by staff picking and packing orders in-store.

Ms Bardwell noted this hybrid approach to keeping up with online demand is likely to continue, with new dedicated sites like the Auburn warehouse only suitable for densely populated areas.

Analysts currently view Woolworths as having the upper hand on its rival Coles when it comes to online orders due to the larger supermarket’s head start on growing its online infrastructure. Coles is in the midst of building a number of automated warehouses with technology partner Ocado to manage its online deliveries.

Amazon is also gearing up for expansion in Australia, with its fifth robotics fulfilment centre in Australia set to open later this year.

The world’s biggest e-commerce company said its new fulfilment centre, which will also be located in Sydney, will be around 200,000 square metres across four levels and create 1,500 jobs.

Amazon’s use of automation and labour practices have been criticised by labour groups in the US and globally, however Amazon Australia director of operations Craig Fuller has said that its warehouse would be a job creator for the state.

“We know from our experience of launching Amazon robotics buildings in other countries that we actually make jobs,” he said.

“Since we started launching robotic sites, we’ve created around about 300,000 jobs.”