With the passing of one year and the start of another, now is the perfect time to reflect on the issues that shaped materials handling operations in 2025 and assess what may lie ahead. 

Read also: Where Supply Chain Leaders are turning Volatility into Opportunity

For supply chain leaders, including those in the general merchandise, apparel and food and grocery sectors, 2025 was a year marked by contradictions. Age-old challenges around labor scarcity continued to plague warehouses and distribution centers even as policy changes like the end of the de minimis exemption emerged. 

The contradictions didn’t end there. Despite the high cost of capital and continued economic headwinds, consumers showed remarkable resilience and a continued affinity for omnichannel brands and e-commerce. 

Even singular trends were marked by contradictory developments. AI hype was at an all-time high, despite questions about hallucinations, security concerns and even the inherent challenges associated with Large Language Models (LLMs) – including that they are stateless and require a massive investment in power-hungry data centers.

Of course, looking back on such developments is both valuable and enjoyable as we begin what undoubtedly will be an exciting year. So with that, and a disclaimer that we lack a crystal ball, here is our take on the pivotal trends that shaped 2025 and our predictions for 2026. 

Key Trends in 2025:

• AI’s promise grew, but so did the challenges: 

There was no shortage of discussion on AI’s transformative potential for materials handling operations, from smarter robotic picking to enhanced supply chain analytics and more efficient warehouse management. But the hype outpaced the reality of real-world deployments.

While advanced machine learning is already being applied in automated solutions, like Vanderlande’s STOREPICK and Nomagic’s piece-picking robots, the use of AI in broader applications like demand forecasting and supply chain management remained in its infancy. The true integration of LLMs into automation efforts also did not materialize and underscores how novel the technology truly is.

• The online grocery sector focused on automating in-store operations: 

The online grocery segment showed again it is here to stay and grow. However, the growth and application of automation remained focused on a decidedly brick-and-mortar application – store replenishment, where it plays a crucial role in making shelf restocking more efficient. Case-level automation, particularly for managing large SKU ranges, saw notable growth as grocers sought to improve efficiency and reduce costs. Technologies like automated stock shelving and store-specific palletizing optimized replenishment processes by enabling pallets to reflect individual store layouts and aisle-specific product assortments – attributes that made such solutions a key area of investment.

• Retailers supercharge fulfillment to meet consumer demand:

As online sales once again outpaced in-store growth, shoppers showed they place a premium on convenience, speed, and reliability. Guaranteed delivery dates emerged as a defining factor in consumer behavior, with two-thirds of holiday shoppers willing to forgo price discounts in exchange for delivery certainty. This pushed retailers to optimize fulfillment operations, focusing on later order cut-off times, next-day delivery, and accuracy.

Leading retailers addressed this by adopting suites of advanced automation, including intelligent shuttle systems, robotic item picking, and goods-to-person technologies that enhance speed, accuracy, and flexibility.

• The shortage of warehouse labor continued to impact brands and accelerate automation: 

Operations continued struggling to attract and retain employees, particularly for the most physically demanding roles, even in the face of continued investments in compensation and workplace benefits. This, combined with high cost of capital, began to shape the types of automation that companies invested in. Instead of broad, sweeping initiatives, many businesses strategically targeted specific tasks where automation delivers a clear ROI and operational efficiency.

Key areas like truck loading and unloading, picking operations, and palletizing also emerged as prime candidates for automation. This targeted approach reflected the reality of constrained capital expenditure, pushing businesses to prioritize investments in areas with the highest impact. For example, 54% of supply chain and logistics leaders focused on automating repetitive tasks and non-value-added services to address labor shortages, highlighting a clear shift toward maximizing efficiency and reducing reliance on manual labor.

In response, innovation in automation technology as a whole accelerated throughout the year. Solutions such as mobile automation, advanced case-handling systems, and trailer unloading technologies gained traction, particularly in labor-intensive industries like grocery.

Looking Ahead to 2026 – The Year of Automation

All of these trends bring us to a new year, one we predict will be marked not only by greater investments in automation, but also a more holistic view of the benefits it delivers. 

• Innovation will redefine both commodity and advanced technologies:

In 2026, the materials handling industry will embrace significant advancements that transform both foundational technologies and cutting-edge solutions. Conveyors and sorters – a fixture of warehouses for decades – will evolve into smarter, more efficient systems that drive higher throughput, greater accuracy, and reduced product damage. For example, a line sorter that can sort all package types as well control individual shoes with a simple controller.

Simultaneously, advancements in robotics and software will tackle some of the most challenging warehouse tasks, such as automating the loading and unloading of trailers. These innovations will address persistent pain points like employee turnover, injuries, and bottlenecks, while also unlocking new levels of efficiency.

• Employees will increasingly see automation as a workplace benefit:

As automation increasingly is used for the most strenuous, repetitive, dangerous and injury-prone tasks, employees will begin to see it as an indicator of a better, safer and more ergonomic workplace. Forward-thinking companies will start to promote their use of automation not just as a business efficiency tool, but as a competitive advantage in attracting and retaining the best talent and people who are eager to take advantage of opportunities to attain more technical expertise, such as skill in the maintenance of robotic systems.

• Fulfillment will emerge as the new battleground for retail success

While brick-and-mortar replenishment remains essential, the rapid growth of e-commerce and multi-channel shopping has made fulfillment the new battleground for customer loyalty. Rising expectations for fast, accurate, and reliable deliveries are driving brands to expand SKU offerings and optimize operations. The complexities of e-commerce—managing vast SKUs, later cut-off times, and order accuracy—far exceed in-store challenges. Fulfillment operations and their supporting warehouses will be pivotal in boosting efficiency, securing customer loyalty, and driving business growth.

• Flexibility will define the future of automation:

The most pressing challenge for businesses in 2026 won’t be adopting automation—it will be selecting the right technologies that offer true flexibility to meet evolving consumer demands. While many products claim to be scalable and flexible, the real question will be whether the technology can adapt to shifting priorities as scalability alone is no longer enough. 

The key to long-term success will lie in procuring and deploying automated solutions able to evolve alongside a business and capable of supporting changing order profiles and diverse operational processes. Such solutions will need to integrate seamlessly not only with warehouse management and transportation management systems, but also corporate systems of record for operations and finance – all with the goal of making real-time business intelligence a reality.

• Dark, or lights-out warehouses will be in reach.

For years, fully-automated warehouses have been a technological milestone and in 2026 they will be feasible for use cases with a specific order profile and the right automated systems. Manufacturing organizations will likely lead the way thanks to hyper-consistent products that allow for standardized automation in sorting, palletizing, and marshalling pallets to loading areas, whereas dark facilities that handle a large number of SKUs and a highly-variable array of items remain years away. In both instances humans will remain essential for maintenance and monitoring.

Let us know what you think of our 2025 reflections and what you believe we got right or got wrong by stopping by to see us at this year’s MODEX event at the Toyota Automated Logistics booth, #B14719.

Author Bio

Jake Heldenberg, director of sales engineering, warehousing, North America, at Vanderlande, oversees the design of warehouse systems that enable retailers of all kinds to transform their businesses for long-term, scalable success with integrated systems that combine intelligent software, robotics and advanced automation.

Andy Lockhart is the director of strategic engagement, warehouse solutions, North America, at Vanderlande, where he provides many of the world’s best-known brands – with the innovative, scalable systems, intelligent software and reliable services needed to optimize distribution and fulfillment operations.