Warehouse Automation Market Poised
for Exponential Growth
October 19, 2020
Analysis has produced a newly updated report on the warehouse automation market.
The over-riding message is that while scores of industrial sectors have suffered
major downturns during the pandemic, and will struggle to recover, the warehouse
automation sector is set to see a period of exponential growth. COVID-19 has
given a massive and lasting boost to the online-shopping sector, driving
warehouse managers to increasingly resort to automation solutions to improve
efficiency and productivity, and enable social distancing on the shop floor.
COVID-19 will depress revenues for 2020 as project completion dates are pushed
back to 2021. At the same time, however, the sudden uptick in online shopping
caused by the virus has resulted in a significant increase in order-intake.
Dematic’s second quarter order intake for 2020 was 100% up on the same quarter
for 2019, and the company plans to hire 1,000 new staff by the end of 2020.
Additionally, the market size of the warehouse automation sector in 2023 is set
to be 6% larger than pre-pandemic forecasts. Whilst some sub-sectors, such as
manufacturing and apparel, are expected to see a reduction in market share – a
combined decrease in value of $600m – general merchandise and groceries will
drive a significant overall net increase in the warehouse automation market. The
report’s data points to a 2023 combined market value of these two sectors of
some $3.5bn higher than pre-COVID forecasts. Ocado is set to become one of the
leading warehouse automation-providers in the grocery industry, with contracts
to build 38 automated warehouses by the end of 2025.
additional important finding is that software revenues are under threat as
online retailers are increasingly following a growing trend of bringing
warehouse execution and management software in-house. Amazon, Alibaba and JD.com
have led the way in this respect, and other online retailers plan to follow
suit. This could ultimately lead to a level of commoditization of warehouse
automation hardware sales, with multiple system integrators forced to bid
tendered out solution designs. The research shows that the reason for this is
the lack of flexibility from off-the-shelf-software.
Rueben Scriven, lead analyst on warehouse automation at Interact Analysis says:
“The warehouse automation world is on the move. COVID-19 has devastated high
streets and shopping malls, but there are already signs that eCommerce retailers
are preparing to step in, with grocery retailers taking advantage of disused
sites to augment micro-fulfilment centres onto existing stores, bringing the
fulfilment process closer to the customer, and attracting customers and jobs
back in to the high street. When it comes to the issue of automation software
development moving in-house, we found that only the grocery sector will likely
continue to heavily rely on existing integrator software solutions. The way
forward for warehouse automation vendors supplying online retailers is to
increase their ability to tailor their software offering to individual