British grocer Ocado announced yesterday that it is bolstering its robotics capabilities with the acquisitions of North American companies Kindred Systems and Haddington Dynamics for a total of $287 million.
Kindred Systems is an AI company that develops piece-picking robots with computer vision and motion control. The technology uses deep reinforcement learning to help robots better handle the variety and types of items found in grocery. Haddington Dynamics builds “highly dextrous” robotic arms that can be 3D-printed and are subsequently low cost.
According to an Ocado presentation on the deal, the company spent $262 million in cash on Kindred and $25 million in cash and stock on Haddington. Both deals are expected to close in 2020.
Putting an obvious two and two together, with these purchases, Ocado is getting a smarter, more advanced system for picking groceries that the company can deploy at its automated smart warehouses.
In a broader sense, these deals come against the backdrop of the global pandemic, which pushed people to record amounts of online grocery shopping this year. While sales have come down from those record highs earlier this year, online grocery is still projected to make up 21.5 percent of total grocery sales by 2025, hitting $250 billion.
All of those orders will need to be fulfilled, and the speed at which orders can be processed and delivered to/picked up by consumers could determine the retail winners and losers in the new grocery landscape.
In a more specific sense, Kroger, which is an investor in Ocado, is using Ocado’s technology to build out automated fulfillment warehouses across the U.S. The first of those warehouses is set to open early next year. The ability to set up smarter robotic systems more quickly could translate into opening up those warehouses sooner.
Ocado isn’t the only robotic grocery fulfillment solution coming online. Takeoff Technologies, which builds micro-fulfillment centers in the backs of existing stores is expanding its relationship with Albertsons. And FreshDirect is using Fabric’s automated fulfillment system in the D.C. area.
With the pandemic still going strong coupled with the colder winter months upon us here in the northern hemisphere, there’s a good chance the online grocery shopping sales will crop back up as people avoid going outside. After eight months of pandemic living, the question will be how much has grocery e-commerce become a new everyday habit. If so, the robots will be ready.