Amazon (AMZN - Free Report) recently bolstered its robotics capabilities by acquiring Canvas Technology, a Boulder, CO-based robotics startup. Canvas is best known for its fully autonomous cart system that leverages 3D imaging techniques.
Notably, these cart type robots are of great use in fulfillment centers as they aid in shifting goods around warehouses. This buyout reflects Amazon’s sustained focus toward reinforcing operations in fulfillment centers and warehouses with the aid of robotics technology.
Moreover, Amazon is expected to benefit from improved efficiency as a result of the deployment of these robots. This is expected to further boost its competitive leverage against prominent retailers like Walmart (WMT - Free Report) , Target (TGT - Free Report) and Kroger (KR - Free Report) , to name a few.
Retailers Embracing Robotics for Efficiency
Robotics that utilizes AI and ML techniques are becoming mainstream in retail industry. Retailers like Amazon, Walmart, Target and Kroger have realized the significance of robots which are capable of meeting output and delivery demands in time even in case of staff shortage or workers strike.
Per a report from Bekryl, global market for retail robots is expected to witness a CAGR of 30% between 2017 and 2028. Further, a Research and Markets report indicates that worldwide inventory robot market is expected to witness a CAGR of 13% between 2019 and 2023.
Consequently, Amazon’s Canvas buyout is a game changer in this regard. The company is already dominating the retail space based on its robust e-commerce strength and growing presence in offline retail space.
Amazon has outperformed the retailers in the past year driven by these factors. The stock returned 28.9% outperforming the S&P 500 Composite’s growth of 8.5%.
Target and Walmart have also outperformed the S&P index by returning 12.5% and 17.2%, respectively. Meanwhile, Kroger’s return is in-line with that of S&P 500.
However, it will be foolish to ignore the growing robotic initiatives of these retailers to counter the threat from Amazon.
Use of Robotics by WMT & Other Retailers Increasing
Walmart has been ramping up its robotics initiatives as evident from its moving shelf-scanning robots deployed at its 50 stores across the United States. Designed by Bossa Nova Robotics, these robots are equipped with cameras to detect any shelving error such as out-of-stock items, incorrect prices, wrong or missing labels or things disarrayed by customers.
Recently, the Zacks Rank #3 (Hold) retailer revealed its plans to introduce 360 floor scrubbing robots to its 1,500 stores. Further, Walmart is testing a bot that aids in unloading boxes from delivery trucks and automatically scan them across its 500 stores.
Meanwhile, Target, which carries a Zacks Rank #2 (Buy), has been experimenting with a robot store clerk at its stores. Designed by Simbe Robotics, the robot is capable of tracking inventory and also acts as an autonomous shelf auditing robot.
Additionally, Kroger has collaborated with Ocado to bolster its warehouse automation endeavors. The Zacks Rank #3 company is gathering steam to build an automated robot warehouse in Monroe, OH in collaboration with Ocado. The warehouse is likely to act as a customer fulfillment center (CFC) for Kroger. Further, there are plans for establishing 20 such fulfillment centers.
Can Amazon Counter the Competition?
Nevertheless, Amazon’s strengthening robotics arm, Amazon Robotics, along with increasing number of robots in its fulfillment centers which is 100,000 at present will continue to bolster presence in the retail space.
The online retail giant’s buyout of Kiva Systems, a robotics company, and increasing number of its robotics buildings globally which currently stands at 26, are key catalysts. Most of these buildings are located in the United States which includes the latest one in a logistics park in New York.
Currently, Amazon carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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