Walmart Plans $200 Million Investment in Self-Driving Forklifts to Automate Warehouses

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Walmart is considering a substantial investment of $200 million in self-driving forklifts as part of its broader strategy to automate warehouse operations, according to sources familiar with the matter. The world’s largest retailer aims to deploy these autonomous forklifts to transport pallets of goods within its distribution centers, which are crucial for restocking Walmart stores.

The retailer is reportedly planning to purchase potentially hundreds of these forklifts from Fox Robotics, an Austin-based startup in which Walmart has already invested $25 million. This rollout, however, is conditional and will occur in stages over several years, contingent on the performance and satisfaction with the “FoxBots,” as described by sources who requested anonymity.

This initiative highlights Walmart’s commitment to warehouse automation to boost profitability and maintain competitiveness with other major retailers like Amazon. The specifics of Walmart’s investment and the phased rollout have not been previously reported, shedding light on the company’s long-term strategy to enhance operational efficiency.

Camille Dunn, a Walmart spokesperson, declined to comment on the $200 million investment. However, she referred to an earlier announcement in April, which mentioned that Walmart had piloted the technology and would add at least 19 FoxBots to four facilities. She emphasized that deployments are “an evolving process” from proof of concept to full rollout, stating, “We evaluate the performance at each phase to determine if the technology meets our ability to better serve customers.”

Fox Robotics, on the other hand, stated that its customer deals are confidential.

Walmart has been increasingly focusing on robotics to streamline operations, manage costs, and keep product prices low. Analysts from Jefferies predict that Walmart’s efforts in automation and artificial intelligence could add $20 billion to its profit before interest and taxes by fiscal 2029. Arun Sundaram of CFRA Research anticipates “more and larger deals in the future.”

In 2022, Walmart announced a deal with robotics vendor Symbotic to implement automation in 42 distribution centers. Walmart held over 13% of Symbotic’s stock as of a January securities filing. Now, Walmart has invested in Fox Robotics and holds warrants to invest further, according to sources.

Both the Fox Robotics and Symbotic deals include provisions that limit the use of their technology by Walmart’s major competitors. These exclusive agreements are not uncommon in the retail industry. The Symbotic agreement, for instance, includes non-compete clauses for key employees and restrictions on selling its technology to certain non-Walmart warehouses.

FoxBots, which have been tested for over a year, assist in unloading pallets and integrating them into Symbotic’s automated system for cataloging and storage. According to Fox Robotics, a single human operator can manage up to six autonomous forklifts simultaneously, potentially saving up to 40% on labor costs. Despite the automation, human workers are still needed for tasks such as opening warehouse doors, but the long-term goal is to reduce labor dependency.

Camille Dunn reiterated, “People will always be part of our warehouse operations.”

Finding workers for warehouse jobs has been challenging, with issues such as low pay, demanding work, and unreliable attendance. Some younger workers are less inclined to take on these physically demanding roles. For example, job postings for Walmart’s Coldwater, Michigan distribution center describe the need to lift 40 to 60 pounds repetitively and operate equipment such as forklifts, with pay ranging from $19.30 to $24.80 per hour for 12-hour or overnight shifts.

David Guggina, executive vice president of supply chain operations at Walmart U.S., emphasized that automation has led to new technical roles for associates and other employment opportunities, rather than job cuts. Automation has helped reduce physically demanding work, resulting in “substantially low turnover” rates. “A reduction in turnover absolutely drives savings,” Guggina said. “You improve your productivity because you have fewer folks that are sitting in what I call the learning curve.”

When asked about the total investment in automation, Guggina stated that Walmart is investing billions of dollars into its supply chain network.

Despite the potential benefits, robotics have not always yielded the expected returns for Walmart. The company discontinued its shelf-scanning robots a few years ago. Katie Driggs-Campbell, a professor at the University of Illinois’ Grainger College of Engineering, noted that the long-term feasibility of robotics can be uncertain and often requires significant adjustments and a controlled environment, whereas humans can adapt more quickly. “We are still far away from robotics replacing humans in the retail industry,” she said.