Ocado Group PLC enters new non-food retail and logistics sectors with new robot

As the coronavirus pandemic accelerates the automation of the retail industry, () has stepped up its investment in robotics and machine learning.

The FTSE 100 group is now buying a company that specialises in an issue that Amazon’s Jeff Bezos has several times stated as perhaps the most difficult and last remaining element in the race to automate the retail industry.

READ: Ocado ups profit guidance and stretches beyond grocery sector with robotic acquisitions

Ocado has agreed to buy Kindred Systems Inc, a US company specialising in ‘piece picking’ robots, for roughly US$262mln.

Using automated intelligence (AI) and deep learning, robots from Kindred and its rivals are increasingly being used by retail and logistics companies to achieve Bezos’s tricky task of picking up and moving items without breaking them.

Kindred robots use automated intelligence (AI) to power their vision and motion control, while the piece-picking arms are developed using ‘deep reinforcement learning’, a form of AI that improves the learning process for robots handling a wide variety of large, small, hard and soft items such as in grocery.

With clients in the general merchandise and logistics sectors, including Gap and American Eagle Outfitters, Kindred expects to have approximately 180 robots installed and operating by the end of 2020.

Gap, which this year more than tripled its item-picking robots to over 100, said each Kindred machine handled the warehouse work of four human workers who normally assemble online orders.

Similarly, as online orders rocketed and social distancing measures remained, American Eagle installed 26 more piece-picking robots at its main US distribution depots this summer, saying normally such a surge of demand would see it hire around 300 more warehouse staff.

As well as Ocado, companies in the UK such as Boots, Co-op Food and Eve Sleep have also invested in warehouse automation this year.

Delivery is another area where automation is entering the retail sector, with Amazon first trialling its delivery robot last year and during the pandemic expanding its fleet in the US.

A survey this summer from US giant ’s warehouse automation business found two-thirds of e-commerce companies were more willing to invest in automation as a result of the pandemic, with 59% of food and drinks companies and 55% of logistics providers saying the same.

Broader opportunities

Ocado, which has already been using cutting-edge robotic technology in the picking processes at its newest online grocery ‘customer fulfilment centre’ (CFC) in Erith in south-east London, is tapping into a growing trend.

And in announcing the deals, Ocado emphasised how the acquisitions will be the first steps to broaden its offering outside the grocery subsector.

“We consider the opportunities for robotic manipulation solutions to be significant, both for Ocado Smart Platform clients and across the fast-growing online retail and logistics sectors,” said chief executive Tim Steiner.

Indeed, Ocado’s second acquisition, Haddington Dynamics Inc, a designer and manufacturer of robotic arm that has been picked up for US$25mln, the immediate commercial aims and end-markets for Ocado are currently less clear.

But as Steiner said, the two acquisitions are designed to enable Ocado to “enter new markets for robotic solutions outside of grocery”.

Haddington, which specialises in the design and manufacture of low-cost, lightweight robotic arms, with current clients including NASA and , could also be a relatively cheap part of the Steiner’s move into making Ocado more of a robotics company than an online grocery specialist.

Indeed, the design and technology of Haddington’s arm, known as Dexter, allows it to…