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Will Warehouse Robotics Be the Future of Retail?

As market pressure increases, many companies are turning to robotics to boost their manufacturing capabilities.

IDC firm market research said spending on robotics and related services is projected to hit approximately $84 billion in 2016 and grow at a 17 percent compound annual growth rate (CAGR) between 2015 to 2019. What’s more, many consumer product companies, including Cambridge Industries Group and Hudson’s Bay Company, are utilizing robots to speed up their distribution processes.

While wages continue to climb in Shanghai and local manufacturers remain behind in high-tech operations, CIG aims to replace two-thirds of its 3,000 employees with automated machines and operate an entirely robotic “dark factory” in upcoming years,” MIT Technology Review reported.

CIG currently utilizes automation at its factories in China. Wheeled robots assist with stamping chips into circuit boards and move completed circuit boards to software checking machines. CIG is also testing a robot to replace workers that label and pack up optical networking equipment for shipping.

Considering almost 25 percent of consumer products are manufactured in China today, robotics could minimize the price of human labor and generate more products in a shorter period. To advance China’s position among other hi-tech nations, Chinese Government officials approved the latest Five Year Plan for China’s economy, which will involve billions of yuan being provided to manufacturers to upgrade their facilities with robots.

“It is very clear in China: people will either go into automation or they will go out of the manufacturing business,” CIG CEO Gerald Wong said.

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Despite the ability to cut costs and speed up production time, replacing human workers with robots is not an easy process. Unlike humans, robots do not possess dexterity and only operate when tasks are in order. Also unknown is what would happen to the 100 million Chinese workers employed at these factories. Once automation eliminates job opportunities, Chinese workers would be forced to go back to their hometowns and pursue other industries to make a living.

Canada-based retailer Hudson’s Bay Company is also making strides in warehouse robotics. In November, the company debuted the nation’s first-ever robotic fulfillment system at its Scarborough distribution center. Hudson’s Bay Company invested over $60 million to advance its logistics abilities and install advanced machinery, including robots.

“We are proud to be the first to bring this industry-leading technology to Canada, in time for the busy holiday season,” HBC CEO Jerry Storch said. He added, “This investment in our Scarborough Distribution Center creates an e-commerce technology hub and allows us to expand our e-commerce business, which is a key component to our all-channel strategy.”

The center’s new Perfect Pick case shuttle system is 12 to 15 times faster than traditional manual processes, hold over one million inventory units and can process approximately 4,200 e-commerce orders hourly. Packing lists are automatically inserted by document handling robots, meanwhile approximately 300 autonomous robotic delivery vehicles (iBOTs) transport inventory for shipping and storing.

The company’s investment follows four years after Amazon’s $775 million acquisition of robotics company Kiva Systems in 2012. HBC’s decision to jump on the automation bandwagon demonstrates how robotics could be a priority investment for many companies. Other big-box retailers, including Kohl’s, Target and Walmart, are allegedly experimenting with robots in their distribution centers as well.

In upcoming years, robots could play an important role in boosting retailer’s prosperity. With the opportunity to minimize labor costs and improve fulfillment, automation provides retailers with an edge over the traditional brick-and-mortar warehousing concept. As nations, including Canada and China, gain momentum in automation technologies, robots could be a game changing benefit for the future of retail.