Essential Warehouse Automation Capabilities for Retailers

Key takeaways:

• Modern retail warehouses need upgrades due to complex SKUs, stock rotations, and varied order volumes.
• Rising costs, labor shortages, and e-commerce demands make 24/7 high-quality fulfillment essential for retailers.
• Automated storage solutions like AutoStore maximize space utilization and storage density.
• Systems like G2P and AS/RS improve order fulfillment, reduce errors, and streamline returns.
• Reliable operations and inventory management depend on purpose-built WMS and real-time data integration.
• Scalable automation solutions with modular components and standardized APIs enhance warehouse performance.

What are the challenges of modern retail & fulfillment?

Retailers face a tipping point where warehouse modernization is essential for growth, driven by complex operational needs. Retail warehouses manage diverse SKUs, frequent stock rotations, and varied order volumes, adding complexity to infrastructure, storage, and customer experience (CX).

Rising warehouse costs, a labor crisis, and the e-commerce boom further strain resources. Space is more expensive and riskier to expand, labor competition is fierce with high wages, and surging e-commerce demands heighten customer expectations. Retailers must ensure 24/7 availability and high-quality fulfillment to stay competitive.

This complexity requires efficient storage, greater stock depth, and the introduction of new product segments, pushing the limits of current infrastructure while maintaining tighter margins and higher service standards. Automation is increasingly recognized by many retailers as being the most cost-effective and realistic solution to all these problems. Without it you simply can’t keep up in the modern retail world.

In this blog, we've identified four essential warehouse automation capabilities that you need to tackle any retail challenge. In each section, you'll discover questions that every decision-maker should consider during a facility assessment process along with recommendations for highest-value technologies to address operational pain points.

Essential capability #1: Space optimization & storage

Fundamental storage factors

Automated storage better utilizes available floor space in a warehouse to increase your storage capacity. There are three fundamental factors underpinning the effectiveness of automated storage for retailers.

1. Storage density: How much stock can one solution store in a given space, versus another storage solution, without impacting the efficiency of other processes?

2. Diverse storage capabilities: Is the storage "product-agnostic," or is it intended for storing certain types of products and product categories?

3. Flexible layout design: How well can the layout be customized to your unique warehouse space to maximize storage in the available space and floor layout? How accessible is your SKU range? Are certain SKUs more difficult to access?

Storage capacity needs

Many storage solutions such as certain rack systems are intended for storing specific types of products, such as small spare parts, while other systems like mini-load are more usually intended for bulk stock in cases or pallets.

For storing high densities of SKUs ready for typical retail order fulfillment, an automated storage and retrieval system (AS/RS) will offer the most flexibility as well as improve storage density.

Many AS/RS solutions use shelving systems to maximize vertical space, improving storage density but not fully optimizing available space. These systems require uniform rows with enough clearance for robotics, limiting floor layout flexibility and making some SKUs harder to access.

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Cube storage solutions, like the AutoStore system, eliminate shelving and aisles, using a cubic grid to tightly stack storage containers ("Bins") for maximum vertical and horizontal space utilization. This approach is more cost-effective as it fills cubic space without expanding the storage footprint.

The design provides fast access to all SKUs, whether A, B, or C movers, using a method called "Bin digging" to efficiently locate and retrieve items. The customizable aluminum Grid can be easily adapted to fit any floor space, including around corners and obstacles, maintaining throughput and simplifying consolidation.

What else to consider?

The storage solution should be easily adaptable, such as by using dividers to store multiple smaller products in a single container to enhance density. It should also support high throughput, even in limited space. Additionally, the layout should be flexible enough to fit your warehouse and accommodate other equipment, which is particularly important if you need to deploy more than one type of storage.

Essential capability #2: Order fulfillment & returns

In manual operations, up to 40% of a worker’s time is spent walking to locate and retrieve items. This makes automation critical. Retailers, in particular, face higher return rates — up to 25% of orders come back to the warehouse. A poor returns process risks losing repeat business due to increased customer expectations.

Throughput requirements

Larger robotic systems like autonomous mobile robots (AMRs) and automated guided vehicles (AGVs) are effective for moving heavy items but less suited for quick picking in dynamic environments. In contrast, goods-to-person (G2P) solutions automate item retrieval, allowing warehouses to process more orders with the same or fewer staff. G2P systems with larger robots need more floor space, limiting operational agility and requiring costly reconfiguration for demand changes. However, automated storage and retrieval systems (AS/RS) with smaller modular components offer flexibility and efficiency, using smaller robots for optimized routing and increased throughput.

Best-in-class AS/RS solutions like AutoStore reduce error rates by 99%, adapt to demand changes seamlessly, and increase capacity without needing more floor space. They also streamline returns, integrating them with picking operations to make returned stock immediately available. ‍

What else to consider?

Enhance AS/RS solutions with complementary technology like robotic arms, pick-to-light systems, or pouch sorters. User interface (UI) screens aid worker interaction and efficiency, reducing training time and labor costs. Flexible design, like AutoStore’s customizable layout, suits integration with specialized solutions such as mini-load or shuttle systems. Avoid add-ons lacking API options to ensure smooth integration and efficient process management. We’ll explore integrations further in group four.

Essential capability #3: Daily operations & inventory management

As warehouses get fuller, and service expectations go up, there’s more potential for things to go wrong — more equipment, more workflows, more picks, and so on. But in a highly competitive market, you likely can’t simply pass rising costs onto customers. Key systems need to perform reliably around the clock to support profitable operations. Successful automation is built on a foundation of accurate, visible data across systems and processes.

Reliable performance

Uptime is a good indicator of how reliable a given solution is. Best-in-class uptime for leading warehouse automation systems should be above 99%. Additionally, you can also check the average time between system outages. Additionally, consider how much maintenance a system needs. Can equipment be serviced or repaired without significantly impacting operations?

Systems designed without a single point of failure (SPoF), ensure critical processes aren’t slowed or shut down if there is a mechanical failure. This means they’ve been designed so that if one component fails, the fault is isolated and the rest of the system operates as normal. For example, think of a shuttle system that uses conveyor belts to transport goods from storage to a workstation. If one of the conveyor belts has a mechanical fault, you instantly get a bottleneck with a backlog of items.

If a single Robot fails within an AutoStore, which is designed with no SPoF, the other Robots continue to pick items, and fulfillment continues uninterrupted.

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Inventory management: WMS & data management

Your warehouse management system (WMS) will obviously be at the heart of your warehouse and inventory management. If you haven’t already, you should consider switching to a purpose-built WMS for retailers. It can provide specialist features, such as omnichannel order fulfillment, batch processing, seasonal & promotional support, etc.

With dynamic ordering, real-time data about inventory status and availability is more critical than ever. You can enrich inventory data and tracking in two different ways:

• Integrating your e-commerce platform or enterprise resource planning (ERP) with your WMS for faster order processing and more accurate inventory status in real-time.
• The use of peripheral or handheld devices equipped with scanners or sensors (such as barcodes or RFID chips) to track stock as it moves through your warehouse.

What else to consider?

Larger equipment will likely demand more resources in terms of regular servicing and maintenance.

Enriched data and analytics requirements are putting a growing focus on the technical infrastructure required to host and manage these capabilities. For many operations, considering cloud-based solutions for hosting your WMS, data processing, and other key systems. This means your IT team can focus resources on analyzing and optimizing daily performance, rather than maintaining technical infrastructure and hardware."

Essential capability #4: Extended integrations & flexible scaling

Any large investment in warehouse automation will involve a number of different but (hopefully) complementary technology, with both hardware and software. One of the most common operational challenges we encounter when talking with customers is limited or missing integration capabilities. If systems can’t communicate or transfer data effectively then it will prevent you from maximizing efficiency and performance.

Integrations  

Ideally, solutions should offer interoperability for easy compatibility with third-party devices and systems. If provided, standardized APIs can be used out of the box or be customized to integrate key systems and hardware in order to achieve the precise functionality you want. This should also future-proof your setup in terms of providing compatibility for integrating new technology later on.

Agile scaling

Look for solutions designed with modular components. This means you can extend the system after the initial installation by adding individual modules, rather than needing to extend the system. This makes scaling more agile and reduces the need for continuous large CAPEX investments and large implementations every time you need to grow your operations.

For example, the AutoStore Grid can be expanded in just a few days to add more total storage, due to its lightweight aluminum construction. It’s also really flexible in terms of layout, as it can be built around corners, etc. to accommodate existing equipment and maximize the available space when you need to add more storage capacity.

What else to consider?

Not all systems expansions can be installed while existing operations continue. For example, larger robotics equipment or systems using shelving using standardized rows, may take longer to plan and execute since you’ll likely need to significantly adjust floor layout, move existing equipment, etc. Adding large mechanical solutions can impact more than your warehouse layout. It may mean significant changes to safe operating areas, requiring new risk assessment reports and additional staff training for example.

Conclusion

The classic characteristics of retail warehouses and fulfillment can be summarized in one word: complexity. Managing a diverse set of SKUs, never-ending stock rotations, and the ebb and flow of order volumes makes it hard to know what kind of infrastructure you need for optimal customer experience (CX). Warehousing costs and labor scarcity make the challenges all the more daunting for supply chain leaders trying to keep up in the hyper-competitive e-commerce world.

With so much complexity facing the retail world, it's difficult to know where to start addressing your limitations, but focusing on the four areas detailed above should help start you on your journey.

While there are many automation technologies on the market to address each of the four areas, the best-in-class can boost your storage density, maximizing revenue per square meter. As mentioned, cube storage fits this profile for retailers by offering the highest density on the market. Whatever technology best suits your business, opt for product-agnostic automation that you can complement with add-on systems. It should have high-throughput capabilities that streamline manual handling, improve the accuracy of fulfillment and returns, and adapt to whatever warehouse space and systems you're currently using.

Above all, don't forget that warehouse automation is now an operational imperative, essential for meeting both warehouse needs and customer demands. For retailers, the question is no longer "do we need automation?" but "what do we automate first?"

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