Wall-E-Mart

What’s going on?

Walmart’s counting on automation to give it a competitive edge.

What does this mean?

Walmart’s same old financial outlook might not have lit up investors’ eyes this week, but the retail giant’s got a long-term ace up its sleeve: automation. See, Walmart’s US operating income has been stuck in a rut for the past ten years – partly due to the rise of e-commerce, which often costs more to manage than in-store sales. And now Walmart thinks it’s found a solution, getting a little robotic aid to help cut costs and revitalize its supply chain.

Think self-driving forklifts that do the heavy lifting, lightning-fast customer demand response, and snazzy, efficient storage solutions. And that’s not some distant reality: it’s already happening. Automated distribution centers will cater to a third of Walmart’s stores by the end of the year – and within three years, the company thinks automation could slash the cost of moving goods by 20%.

Why should I care?

The bigger picture: The patience of Job(s).

Walmart’s robo-revolution isn’t just about wowing Wall Street: it’s poised to shake up the job market too. The world’s top retailer has been trimming jobs in fulfillment centers – and while some supply chain roles may grow as sales volumes do, the net effect is still going to be job loss. So watch this space: if other retailers end up following suit, it just might change the jobs market as we know it.

Zooming out: Don’t go full Luddite yet.

We’ve said it before: these developments aren’t guaranteed to be for the worse. The rise of automation could also spawn entirely new jobs, and it could make our lives easier too. One Nobel Prize-winning labor economist has suggested that the AI revolution could supercharge productivity, leading to more leisure time and maybe even a four-day work week. Here’s hoping.

—

Originally Posted April 5, 2023 – Wall-E-Mart