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A new report from McKinsey suggests that automation has reached a tipping point for grocery warehouses in Europe.

Automation in grocery warehouses has significantly accelerated, thanks to several trends, the report authors conclude, adding that now is the time for retailers to reassess their automation strategies.

While automation has been a part of retail supply chains for decades, its prevalence has recently increased significantly. The size of the global warehouse automation market grew by 10.3% each year from 2015 to 2019 -more than double the previous five years. This trajectory appears set to continue, with the market expected to double again by 2026.

According to the report, this rapid shift is driven by three big trends:

• A steady increase in labour costs combined with workforce capacity constraints.


• The growth of e-grocery.


• Falling costs as technology and platform providers, such as Knapp, Ocado, Swisslog, Takeoff Technologie and Witron, have extended their ever-growing portfolio of automation solutions combining software and hardware.

"While the acceleration of automation is encouraging, the real takeaway for grocers is the recent uptick in the adoption of warehouse automation solutions. This technology represents a clear opportunity for the sector," the report notes.

"Though in the past the business case for a high degree of automation did not work out or the technology did not offer enough flexibility, it now might. Grocery retailers in Western Europe, North America, and other markets with high labor costs should reassess their automation strategies," the report authors suggest.