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Walmart sees automation as the future
CEO predicts big decline in labor costs as warehouses adopt robotics, implement inventory optimization
Mark Hamstra
December 7, 2022
2 Min Read
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Walmart sees investments in automation as one of the key factors driving its profitability in the years ahead, Doug McMillon, president and CEO of the Bentonville, Ark.-based retailer, said at an investor presentation on Wednesday.
Speaking at the 2022 Morgan Stanley Global Consumer & Retail Conference, McMillon said that robotic warehouses, in which goods are moved by unmanned wheeled carts, will not only reduce the need for workers in the warehouses themselves, but also in the stores where the goods are received.
In the future, he said, products will be delivered to stores on pallets that have been organized according to that store’s particular layout, category by category, so that employees can stock shelves efficiently directly from a pallet, rather than carting boxes of individual products back and forth from a back room.
“It’s a different process, eliminating a lot of hours that we invest in in the back rooms of our stores,” McMillon said.
Over the coming years, combining those kinds of robotics with inventory optimization technologies and predictive sales analytics will drive costs out of the system, he said.
McMillion was also asked about the potential impact of the pending Kroger-Albertsons merger, which would form a larger competitor, but he declined to comment specifically on that possibility.
“We have had and will have a strong set of competition,” he said.
He also said that the fast rate at which inflation has risen, particularly in grocery categories, has exacerbated the impact that rising prices have had on shoppers.
“We were not expecting this level of grocery inflation — it was steeper in terms of its trajectory,” McMillon said.
Walmart began noticing shifts in consumer behavior around March, he said, as lower-income consumers—households earning less than $50,000 annually—began shifting away from discretionary purchases. Since that time, higher-income consumers have followed that same pattern.
“Now we see it at all income levels,” McMillon said.
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Is Walmart right? Are robotic warehouses the future? Leave your thoughts in the comments below, or email your thoughts to SN Executive Editor Chloe Riley at [email protected].
