Dive Brief:

• Jewel-Osco opened its first automated micro-fulfillment center (MFC) on Tuesday in Westmont, Illinois, a southwestern suburb of Chicago, according to an email from a spokesperson for Takeoff Technologies, which helped build the site along with the systems and software that power it.
• The 20,000-square-foot facility, which sits next door to a Jewel-Osco grocery store, holds around 6,500 products and can fill up to 1,000 orders daily to customers within a 20-mile radius, according to a Chicago Tribune report.
• This is the latest MFC opening for parent company Albertsons, which plans to have seven of these facilities in operation across the country by next spring.

Dive Insight:

Albertsons-owned Jewel-Osco is turning to automated MFCs to help meet demand for e-commerce orders in the bustling Chicago market. In addition to the facility that opened Tuesday, the company plans to open a second site on the city’s West Side next summer, the Chicago Tribune reported. 

The company’s first MFC, which cost $7.6 million to construct and will have a staff of 27 workers, carries approximately 60% of the items that appear in most online orders, with the rest of each order picked from the Jewel-Osco store located next door, Mike Withers, the grocer’s president, told the paper.

As orders come in, Takeoff’s automated rack-and-tote system moves product totes to a decanting area for sorting, then to picking stations where Jewel-Osco workers will pack up to four orders at a time. Robots shuttle completed orders to a separate area where workers stage them for pickup or delivery by third-party services like DoorDash and Shipt.

MFCs promise to alleviate fulfillment pressure on stores and allow retailers to fill higher order volumes. But the technology remains a work in progress, experts say, as grocers and tech vendors focus on bringing down the cost of preparing orders. Albertsons remains one of the most enthusiastic supporters of MFCs, having forged a strategic partnership with Takeoff Technologies in 2019 that brought the two companies closer together to develop MFC systems. CEO Vivek Sankaran frequently promotes the technology in public appearances and quarterly earnings calls.

“We've seen the MFCs getting to a point where the cost to pick becomes about the same as the labor cost that we have for an order in a store… because of the productivity it gives you,” he said during the company’s Q2 earnings call in October.

Sankaran said at the time that Albertsons plans to have seven MFCs in operation by the end of the fiscal year, which ends in the spring. That’s down from an earlier projection of nine MFCs completed by the end of this year, which Sankaran noted is due to delays in permitting and construction.

Takeoff Technologies has raised $155 million to date and has partnerships with Ahold Delhaize, Wakefern, Big Y, Associated Wholesale Grocers and Sedano’s in the U.S. It's also partnered with grocers abroad, including Loblaws in Canada and Woolworths in Australia.