Supply chain leaders at U.S. retail and e-commerce companies operating globally are adept at transformative change. Many navigated the pandemic’s disruptions and adapted to the demands of today’s true omnichannel consumer. They also witnessed a dramatic acceleration in innovation, alongside the rapid adoption of automation and robotics solutions that seemed unimaginable just a few years ago.
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In these times, reflecting on the past year and anticipating what lies ahead is a valuable exercise. It helps assess what succeeded and what didn’t, while identifying emerging trends and their potential impact on business strategies. Plus, it’s an enjoyable way to close out one year and begin the next.
So what did retail materials handling professionals in the food and grocery, general merchandise and apparel industries experience in 2024, and what will they likely encounter in the year ahead? More precisely, what were the pivotal trends among leading global brands and fast-growing challengers? And looking forward, what will they encounter in what promises to be another memorable year?
With the caveat that hindsight is 20/20 and a nod to Yogi Berra’s contention that “it’s tough to make predictions, especially about the future,” here is our 2024 roundup of noteworthy developments in warehouse automation for retailers, e-commerce companies and dynamic omnichannel brands, and our synopsis of key issues we believe will be top-of-mind in 2025.
2024: The Year it All Came Together
Over the past year materials handling automation went mainstream. Despite the fact that the world’s largest brands have relied on advanced automation for many years, the majority of materials handling operations continued to rely heavily on manual processes and systems in their warehouses. In 2024 this changed rapidly, as mid-sized retailers across sectors embraced automation for the first time to address the shortage of warehouse labor and keep up with larger competitors.
Intent to set themselves up for success over the next 20, 30 and even 40 years, these businesses predominantly chose to invest in new, fully-automated greenfield facilities. This resulted in a new era of truly mainstream adoption of materials handling automation. You could even say that we witnessed its democratization.
In contrast, large brands predominantly opted to ‘sweat their materials handling assets,’ rather than making large capital investments amid uncertainty around inflation and interest rates. Instead they opted to add value to their existing operations and assets. This included deploying new goods-to-picker systems, expanding existing Automated Storage & Retrieval Systems (AS/RS) and adding new, more advanced to conveyor and sorting systems.
Known and proven automation also reigned supreme. Even in the face of significant hype around impressive innovations in robotics and increased use cases, adoption proceeded slower than many expected in 2024. The general merchandise sector was one exception: Although AS/RS remained the dominant investment in automation, the deployment and use of item-picking robots increased.
In the apparel arena, there was a noticeable and sustained uptick in demand for new, more advanced goods-to-picker systems and pocket sorters, while in the grocery sector the creation of fully-automated systems dominated completely – particularly related to technologies that are now proven and relied on globally. These included mixed-case palletizing systems that can deliver a consistent return on investment across numerous grocery and food retailers.
Notably, in 2024 we also saw a dramatic increase in demand for Automated Case-Handling Mobile Robots (ACRs). This enabled organizations with relatively lower-level throughput needs to deploy an automated item picking and storage solution that uses traditional, and sometimes pre-existing, warehouse rack systems. Such factors made it universally attractive to operations that needed to address new distribution and throughput needs, as well as expansion efforts, quickly and effectively. In contrast to AS/RS systems that take significant time to design and build, ACRs can be up and running in a matter of weeks.
Finally, and perhaps most strikingly, fears of a recession proved to be just that – fears. Despite a consumer price index that continued to increase by more than 3%, inflation and comparatively high interest rates, consumers continued to buy. In the U.S., retail e-commerce sales increased – with Q1 2024 e-commerce sales amounting to an 8.6% increase over the same quarter last year, and Q2 2024 sales were 6.7% higher than those in Q2 2023. Amazon’s venerable Prime Day event also saw online shoppers spend an awe-inspiring $14.2 billion over July 16-17 – a full 11% more than last year.
Reading the Tea Leaves for 2025
Withstanding a dramatic geopolitical event, pandemic, or trade war – all of which are regrettably possible – in 2025 we will likely see a continuation of the trends we saw shape the materials handling landscape in 2024. This will be driven in part by the caution of the Fed, which likely will not make any abrupt changes in interest rates that could cause uncertainty and volatility. For that reason, mid-sized organizations will likely continue to invest in greenfield, fully automated facilities.
Larger players will also continue to ‘sweat their assets’ by enhancing their warehouses and distribution centers with point solutions that address specific business processes and challenges. Others will opt for modular enhancements – such as installing additional storage, shuttles and lifts in existing AS/RS to increase throughput and capacity.
Likewise, we will likely see a continued focus on refining technologies that deliver a known return with efforts to optimize innovations that entered the market over the past decade – among them automated mobile robots, robotic pickers, and vision software – with incremental advancements. The resulting stabilization of these assets will enable warehouse leaders to demonstrate a consistent, predictable impact on their organizations, and to show in more clear terms how materials handling operations impact topline and bottom-line results.
This mindset will also govern how most warehouse operations approach AI. The buzz around the application of AI will continue, but most projects will remain in an exploratory phase as leaders work to determine how AI can be utilized in their operations, what return on investment it will deliver, and whether such gains offset the significant compute, storage, networking and cybersecurity investments associated with it.
The automation industry itself will also change. This will be especially true in the robotics arena, where many players are venture-backed startups under pressure to quickly generate profits, something that will drive continued consolidation and acquisition activity among larger players.
Notably and ironically, leasing options – something which makes today’s AMRs particularly attractive to warehouse operations that need to quickly deliver greater throughput while keeping CapEx costs in check – will only accelerate this trend by extending the payout period for suppliers. It will be important for brands to keep these issues in mind as they vet and select robotics vendors.
In the Moment
With another year behind us and an exciting one ahead, it is also important for retail supply chain leaders to ask themselves several important questions. Does my materials handling operation and use of warehouse automation mitigate the risks of labor shortages and other prescient challenges, including increased throughput and storage requirements?
More fundamentally, it’s time to explore a crucial question: Do my retail distribution centers and fulfillment operations deliver a competitive edge, not only in terms of profitability but also in exceeding customer expectations for order accuracy, on-time delivery and timely restocking of store shelves? Armed with answers to these questions, materials handling operations can confidently move forward in the year ahead.
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.
