Woolworths gears up for digital deliveries with robotic Sydney warehouse

Grocery giant Woolworths is building a new automated warehouse in Sydney’s western suburbs, as it gears up for more of its customers doing their weekly shop online.

The move comes following soaring demand for home-delivered groceries over the past 12 months across Australia’s supermarket sector, as the pandemic forced more housebound shoppers online.

WooliesX boss Amanda Bardwell is preparing for a permanent shift towards online shopping.Credit:Wolter Peeters

Both Coles and Woolworths have reported a signifcant spike in digital sales, with Woolworths’ nearly doubling from July through to December to $1.8 billion, or nearly 8 per cent of its total sales.

Amanda Bardwell, the managing director of Woolworths’ WooliesX online division, told The Age and The Sydney Morning Herald that the company had brought forward its plans to build the warehouse on the back of last year’s e-commerce gold rush.

“We know that there has been a permanent shift in the way that customers shop,” she said. “So we want to make sure our network is set up to best serve our customers going forward.”

The 22,000 square metre fulfilment centre will be located in Auburn, NSW, and will employ about 250 people on its planned completion in 2024. Woolworths will spend about $100 million to build the facility, which the company hopes will dispatch 50,000 home delivery orders a week.

Ms Bardwell said shoppers were putting greater emphasis on getting their items either the same day or the next day, requiring Woolworths to move away from its system of shipping orders directly from individual stores for high-density areas such as western Sydney.

“Our store networks are always going to be our first port of call,” Ms Bardwell said. “But when we have in some of these high-density areas like Western Sydney where we’ve got 2 million residents … we want to supplement that network with some additional capacity from a dedicated and automated fulfilment centre.”

Woolworths is partnering with Austrian automated systems company Knapp to build the robotic warehouse, which is still subject to approval from the NSW Department of Planning.

The supermarket giant is experimenting with a range of systems to help fulfil its online orders, with a handful of stores trialling a ‘micro-fulfilment’ model where orders are completed via small distribution centres that are built into the back of existing Woolworths stores. However, the majority of orders are still completed by staff picking and packing orders in-store.

An artist’s render of the new Auburn fulfilment centre.

Ms Bardwell noted this hybrid approach to keeping up with online demand is likely to continue, with new dedicated sites like the Auburn warehouse only suitable for densely populated areas.

Analysts currently view Woolworths as having the upper hand on its rival Coles when it comes to online orders due to the larger supermarket’s head start on growing its online infrastructure. Coles is in the midst of building a number of automated warehouses with technology partner Ocado to manage its online deliveries.

Grant Saligari, analyst at Credit Suisse, said he expected e-commerce sales to continue to be a major growth area for supermarkets in the years ahead. “We do think it’s likely we’ll see an overall trend in the next two or three years in expanding online shopping for the supermarkets,” he said.

Coles and Woolworths are both set to release their third-quarter results this week which are likely to be negative due to the supermarkets having to compare their numbers against the panic buying frenzy of last Marc.

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