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Walmart plans to turn more stores into warehouses to take on Amazon

CNN logo CNN 1/27/2021 By Nathaniel Meyersohn, CNN Business
a group of people standing in front of a building: A Walmart employee waits for the Alphabot system to expel carts filled with customers' online orders at a Walmart micro-fulfillment center in Salem, MA on Jan. 8, 2020. Walmart has teamed up with Alert Innovation, a robotics engineering team firm in North Billerica, to build the 20,000-square-foot, semi-automated miniature warehouse next to a Walmart Superstore. Humans and robots work together to quickly pack thousands of grocery items that were ordered online from massive shelves. Each robot has geared wheels that let it climb up or down through horizontal shafts. When it reaches the right level, the robot rolls up to the correct bin, plucks it from the shelf, then descends to a packing station. The robot passes the bin to a Walmart worker who picks out the correct item and plops it into a different bin lined with standard grocery bags. (Photo by Suzanne Kreiter/The Boston Globe via Getty Images) © Suzanne Kreiter/The Boston Globe/Getty Images A Walmart employee waits for the Alphabot system to expel carts filled with customers' online orders at a Walmart micro-fulfillment center in Salem, MA on Jan. 8, 2020. Walmart has teamed up with Alert Innovation, a robotics engineering team firm in North Billerica, to build the 20,000-square-foot, semi-automated miniature warehouse next to a Walmart Superstore. Humans and robots work together to quickly pack thousands of grocery items that were ordered online from massive shelves. Each robot has geared wheels that let it climb up or down through horizontal shafts. When it reaches the right level, the robot rolls up to the correct bin, plucks it from the shelf, then descends to a packing station. The robot passes the bin to a Walmart worker who picks out the correct item and plops it into a different bin lined with standard grocery bags. (Photo by Suzanne Kreiter/The Boston Globe via Getty Images)

Walmart plans to build automated mini-warehouses in dozens of its stores to speed up customers' online delivery and curbside pickup orders in a race against Amazon.

Walmart announced Wednesday that it will add dozens of 20,000 square-foot to 30,000 square-foot automated fulfillment centers in the coming years, either in the backrooms of its stores or next to them.

In the centers, robots will gather thousands of pantry items and frozen foods instead of employees, which Walmart says speeds up the process. The items will then be brought to an area where Walmart workers can assemble them into orders for pickup or delivery.

The centers may also ease traffic in store aisles because they will limit the number of Walmart employees gathering inventory directly from the store floor to fulfill online orders. Crowded aisles are a growing problem for stores as online shopping accelerates, and retail analysts have said these automated fulfillment centers help solve this challenge.

Walmart's plan comes as online ordering surges in the pandemic. Walmart's online sales, which include pickup and delivery, climbed 79% during the three months ending October 31 compared with the same stretch last year. The prior quarter, online sales grew 97% from a year earlier.

The company hopes that adding these new fulfillment centers will allow stores to handle more orders and get them ready at a faster pace.

Tom Ward, Walmart's US senior vice president of customer product, said on a call with reporters Tuesday that the centers would enable Walmart to fulfill curbside pickups and home deliveries within an hour.

Walmart is not the only big grocery chain experimenting with these small fulfillment centers in its stores. Albertsons and Stop & Shop are also testing them in their own stores.

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