Rise of the machines: Canadian retailers on 'cusp' of using more robotics

CityNews.ca
June 15, 2017
Linda Nguyen

Back in 2009, Sobeys found itself at a crossroads.

Labour costs were rising, employee productivity was waning and the grocer knew that it had to keep building bigger distribution centres to accommodate the growing number of items being sold in its supermarkets.

So instead of building out and hiring more workers, the national grocery chain built up and replaced many employees with robots.

“The combination of labour costs going up and SKUs (stock keeping units) being on the rise kind of forced us to start thinking outside the box and try to find a technology to help us resolve those issues,” said Eric Seguin, senior vice-president of distribution and logistics for Sobeys, during a tour this week at the company’s largest warehouse in Vaughan, Ont.

Sobeys is one of a small number of Canadian retailers that have embraced robotics technology. Others have been reluctant to follow suit, experts say, due to a lack of investment, a lack of access to the technology and for a long time, a lack of competition.

Today, Sobeys operates four robotics distribution centres: two facilities north of Toronto spanning 750,000 square feet, another in Montreal and one in Calgary that opened earlier this month.

Unlike its 21 traditional warehouses, the mostly-automated centres rely on robotics instead of workers to pull items off the shelves and pack them onto pallets to ship to its 1,500-plus grocery stores.

The robots, which whiz up and down rows of stacked products piled up to 75 feet high for 20 hours a day, have resulted in reduced employee costs and quicker and more accurate deliveries, Sobeys says. It’s also allowed the Stellarton, N.S.-based grocer to double the amount of items that can be stored.

One robot does the work of four employees, Seguin said.

“The robots don’t get tired,” Seguin said.

“They always show up the morning after the Stanley Cup final. They are always there the morning after the Super Bowl. It doesn’t matter if it’s 35 (Celsius) and a beautiful weekend.”

The company has spent between $100 million to $150 million on each of its robotics facilities. Seguin says retailers, especially those in the grocery industry, have been slow to adapt due to the high upfront investment costs.

But that attitude is changing — and fast, says retail consultant Doug Stephens.

“Retail in this country has enjoyed for many decades a bit of a dearth of competition, which is coming to an end now,” said Stephens, who recently wrote a book called Re-Engineering Retail.

“With the influx of U.S. players in the last decade and certainly with the presence and impact of Amazon, Canadian retailers are really having to awaken to the idea that if we don’t adapt and change and compete — we’re going to be in big trouble.”

Behemoth multinational corporations like Amazon and Walmart have raised the stakes for Canadian retailers, offering lower prices, as well as quick and often free delivery or pickup services.

Last year, Canada’s oldest retailer, Hudson’s Bay Company, said it was spending more than $60 million in robotic upgrades to its 725,000-square foot Toronto distribution centre. Online orders that would’ve taken up to 2 1/2 hours to locate and pack manually are being shipped out of the warehouse and onto a truck within 15 minutes.

“We’re really just on the cusp of the capabilities of these technologies,” said Stephens.

While manual labour jobs are being lost in retail, the types of positions that survive the wave of automation will evolve and likely be more focused on loyalty and analytics, says Marty Weintraub, a partner in retail at consulting firm Deloitte.

“Robots can be much cheaper to implement and execute, and they don’t come with some of the challenges that humans would face such as making errors or having poor judgment,” he said.

“But technology cannot replace certain skills that computers can’t do today, like jobs that require problem solving, intuition, the art of persuasion and creativity.”

According to documents obtained by The Canadian Press in March, federal government officials were warned that the Canadian economy could lose between 1.5 million and 7.5 million jobs in the next 10 to 15 years due to automation.

In a report, Sunil Johal of the Mowat Centre at the University of Toronto estimates that the retail sector employs about two million people and between 92 per cent to 97 per cent of those who work in sales or as cashiers are at risk of losing their jobs.

“We’re just scratching the surface of how technology can affect the retail sector,” said Johal. “That’s a cause of concern.”