NEWS
Recent Market Activity
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Recent news of Kroger closing three of its automated fulfillment centers in partnership with Ocado has fueled an ongoing debate in the industry as to what types of automation and what size of deployments are most suitable for current states of demand. Kroger announced that the decision would provide a US$400 million boost as it looks to improve e-commerce profitability; however, the move is also expected to incur charges of around US$2.6 billion. Many have suggested the centralized mega-facility model of distribution is not the be-all and end-all that it was suggested to be, and that large and complex infrastructure requiring automation projects such as these are not the best way to introduce automation to operations.
On the provider side, 2025 has seen an increasing number of System Integrators (SIs) exploring partnerships with mobile automation providers and developing new divisions to cater to more flexible, low Capital Expenditure (CAPEX) demands. Examples include:
- Zion Solutions Group partnering with Geek+ to expand AMR capabilities.
- VARGO partnering with robotics company Geek+ to expand automation in e-commerce and retail.
- HOJ Innovations launching an AMR division to cater to growing businesses.
- Hy-Tek Intralogistics and Locus Robotics partnering to deliver scalable AMR solutions.
IMPACT
Shifting Market Interests
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When a company starts to explore ways to automate their warehousing and fulfillment operations, the types of products they handle, the volumes, the demand variability, the budget, and the infrastructure available (among many other factors) all play a key role in deciding whether fixed automation, mobile automation, or a blend of the two is right for them. While the news would point to large, fixed automation projects struggling to provide Return on Investment (ROI) and mobile automation becoming the more sure-fire way to achieve profitability, this idea neglects the varied needs of organizations both at different scales and across different industries.
Online grocery, for example, has always been incredibly hard to make profitable. Razor thin margins, highly variable demand levels, and a product range that is impossible to cater to with a single system makes it difficult for food retailers to guarantee the performance of an automated system, as has been shown by Kroger. Industries like e-commerce and retail that can have more product consistency both simplifies system deployment and allows the system to take on more volume.
What is becoming more apparent in the industry is that companies no longer want to build out automation with forecast requirements, but rather “deploy for now” and base installations on current needs. This means starting smaller and taking on systems that can be scaled up (or down) very easily based on changing demands. ABI Research survey results support this suggested trend, with 43.9% of respondents planning for a transition from manual to mobile robotic picking, compared to 35.1% for fixed picking (Automated Storage and Retrieval Systems (AS/RS)). Planned investment remains for both, but plans appear to have shifted in favor of flexible, mobile-based automation in the last year.
In addition to the partnerships being developed by SIs above aligning with this changing demand, we’re also seeing innovation of systems that blend AMRs with fixed racking to create systems that retain the storage density of a typical AS/RS, while providing the flexibility of AMRs—all with the lower infrastructure requirements of simple racking. Exotec, Brightpick, and KNAPP’s new AeroBot system are all key examples of this and expected to see continued success as systems that allow users to start small, prove faster value, and be able to scale up or down according to seasonal needs.
RECOMMENDATIONS
Expectations for 2026
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Based on recent survey findings, industry activity, demand changes, and technology developments, ABI Research anticipates the following trends to occur in 2026:
- Higher Investment in Automation from the Middle Market: Based on the survey results, we’re seeing clear investment intention over the next 2 years from mid-sized firms (500 – 9,999 employees). Less than 15% have no investment plans, while 38.9% plan to spend over US$100,000 on AS/RS solutions, and 34.2% plan the same for AMRs.
- More SIs Developing More Modular or AMR-Based AS/RS Systems: Many SIs have partnered with AutoStore over the years to deliver cost-effective, scalable AS/RS, but it’s likely that we’ll see more products like the KNAPP AeroBot and Exotec systems developed by large SIs to compete.
- Big Infrastructure Projects Limited to High Margin, Highly Repeatable Volume Industries: Industries like e-commerce and pharmaceuticals are prime candidates for large AS/RS deployments, but are likely to favor more regional over centralized distribution centers to speed time to market.
- Consolidation of Mobile Manipulators and Humanoid Startups: A number of startups have entered the market offering more dexterous robots, driven largely by advancements in Artificial Intelligence (AI). Despite high amounts of initial investments, value is unlikely to be proven fast enough for deployment to be achieved at scale. Acquisitions are likely to occur by large robotic OEMs and potentially SIs looking to obtain new resources.
- SIs to Become Software-Led: We’re seeing continued advancements in Sis’ software portfolios, like the Dematic iQ suite, FORTNA WES, and KNAPP KiSoft platform, becoming more than isolated execution systems and delivering full-stack operational management tools.
- Moving from Pre-Programmed to Dynamic Operation Models for Automated Systems: We’re reaching a turning point where dynamic operation models (where robots can choose from various different policies taught to it via reinforcement learning) are outperforming preprogrammed models and, therefore, allowing systems to become more intuitive and reactive.
- A Crucial Year for Private 5G to Show Value: The value of private 5G networks in improving the effectiveness of automation within facilities is evident, but deployments remain limited. Both SIs and private 5G providers must establish partnerships to drive industry uptake through 2026 and get ahead of the issues that end users are likely to face with existing Wi-Fi setups as they take on more mobile automation.
