Walmart is going big on what it is calling local fulfillment centers (LFCs), announcing that it's scaling up its use of in-store or store-adjacent modular storage and retrieval systems that will allow for faster and more efficient online order fulfillment in what represents a major commitment to automation.
Walmart opened its first LFC in Salem, N.H., in late 2019, and after seeing promising results, plans are in the works to expand microfulfillment centers to "dozens of locations, with many more to come," Walmart U.S. SVP of Customer Product Tom Ward wrote in a blog post. Walmart's LFC system will rely on a combination of robotic order picking for items such as electronics and other packaged goods and human selection of fresh produce, meat and seafood, as well as large general-merchandise items from a store's sales floor.
"This whole process can take just a few minutes from the time the order is placed to the time it’s ready for a customer or delivery driver to collect," Ward wrote—meaning Walmart can pick more orders and customers can retrieve their order or have it delivered within an hour.
Some stores will also add automated, drive-thru pickup points, allowing customers to scan a code to have their order retrieved automatically, Ward added. Though Walmart didn't state as much, this automated pickup technology could also reduce labor demands associated with curbside pickup.
"It’s no secret our customers love the speed and convenience of pickup and delivery," wrote Ward. "These local fulfillment centers help unlock our ability to expand even faster to meet their needs today, while also setting a new foundation to serve them in the future."
Bentonville, Ark.-based Walmart is working with multiple technology companies to test different store orientations for the modular LFCs—in-store vs. attached to an existing store, for example. Among these are Alert Innovation, Dematic and Fabric.
Walmart has been working with Alert since 2016, when it reached an agreement to fund Alert's Alphabot order-picking technology. "Walmart was the first food retailer to recognize the need to automate fulfillment of online orders at store-level," Alert founder CEO John Lert said in a statement in response to Walmart's announcement. "Walmart’s announcement is exciting as it’s the largest deployment of automated micro-fulfillment technology announced to date by any retailer and represents a major step in the evolution of local fulfillment."
Fabric, an Israel-based logistics and microfulfillment specialist, opened the doors to its first U.S. microfulfillment center in New York in late 2020. The company earlier in 2020 announced a deal with East Coast online grocer FreshDirect to help allow for two-hour grocery delivery in the Washington, D.C., metro area.
"As consumers are shopping for their groceries more and more online, the need for same-day and 1-hour deliveries becomes critical—and as our solution was built for on-demand, Fabric is in a unique position to enable retailers to meet this need for speed, in sustainable unit economics and superior operational scalability," Fabric CEO and co-founder Elram Goren said in a statement Jan. 27.
Walmart offered no timeline for its LFC expansion, saying only that the company is "excited about this new chapter for our business and what it means for our customers."
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