CSCMP's Supply Chain Quarterly
technology
February 22, 2020
Forward Thinking

Takeoff Technologies expands grocery fulfillment deal with retailer Albertsons

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Grocer to meet e-commerce demand with automated micro-fulfillment centers as rival food retailers Walmart, Krogers, Ahold Delhaize boost logistics spending.

Automated grocery fulfillment system provider Takeoff Technologies is expanding its relationship with grocer Albertsons Companies, saying their strategic partnership will accelerate order fulfillment by building "micro-fulfillment centers" (MFCs) to handle e-commerce orders.

Takeoff / Knapp shuttlesAlbertsons already operates two of those units, and has now agreed to purchase more MFCs from Takeoff and to evaluate additional market expansion opportunities.

The move is the latest chapter in the rapidly expanding sector of food fulfillment, highlighted by grocers building small, automated warehouses located close to their customers and investing in material handling and delivery platforms. Other supermarkets following the strategy include Walmart Inc., which announced a pilot program on Tuesday to deliver groceries through a deal with an autonomous vehicle company called Nuro.

Likewise, grocery rival Kroger Co. is expanding a program that operates miniature "store-within-a-store" shops inside of Walgreens drugstore sites and is building a sixth installation of "customer fulfillment centers" designed by the e-commerce automation vendor Ocado.

And Dutch grocery giant Ahold Delhaize said Tuesday that its U.S. division would spend $480 million to transform and expand its supply chain operations on the U.S. East Coast, building fully automated distribution facilities that will operate in a "fully-integrated, self-distribution model."

Takeoff and Albertsons began their partnership in 2018 with the decision to build two MFCs that would be constructed in existing grocery stores. Albertsons began operating its first pilot unit on Oct. 23 at a Safeway in South San Francisco, and is scheduled to launch another one at a Safeway in San Jose, California, before the end of 2019.

Albertsons operates stores across 34 states and the District of Columbia under 20 banners including Albertsons, Safeway, Vons, Jewel-Osco, Shaw's, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen, and Carrs.

Boston-based Takeoff provides robotics technology through a partnership with automated warehouse solution provider Knapp. Takeoff says its model operates at a much lower cost-to-serve than other e-commerce platforms, generating savings for both the cost of assembling the order and the cost of last mile delivery.

Takeoff also has deals in place to build automated e-grocery fulfillment systems with retailers like the Australian supermarket chain Woolworths Group, food cooperative Wakefern Food Corp., and Miami-based supermarket chain Sedano's. That fast growth is fueled by investors, as Takeoff announced in September that it had raised $25 million in venture funding, bringing its total capital raised to $86 million.

"The micro-fulfillment center model is a key element in the store of the future," Albertsons President and CEO Vivek Sankaran said in a release. "It combines the efficiency of automation with the ease of meeting customers when and how they want to shop. In working with Takeoff, we can evolve how the MFC ties into our store and e-commerce ecosystems and accelerate our path to best serve our customers."

Ben Ames is Editor at Large and a Senior Editor at Supply Chain Quarterly’s sister publication, DC Velocity.

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