Walmart's push to automate about 200 supply chain facilities in the U.S. is facing ongoing technical and operational setbacks, with frequent malfunctions of robots from its main partner Symbotic, in which Walmart holds a 12.6% stake.

Robots have been shut down due to dust accumulation, failures in handling oversized items like large bags of dog food and frozen turkeys, and boxes exceeding a height of 1.5 inches, leading to incompatibility; at some testing sites, only about 80% of inventory has been automated.

A Symbotic spokesperson stated that the repair rate for robots has decreased from under 10% last year to about 5%, but the company still struggles to meet throughput targets. Maintenance requires high-salary engineering talent, and the monthly peak electricity costs for some automated warehouses exceed $800,000, far higher than the $250,000 for manual warehouses.

Since 2016, Walmart has invested nearly $1 billion in in-store automation, having previously acquired Alert Innovation and sold it to Symbotic at a loss, while also paying an additional $520 million to complete related system development, with a new test version expected to be available by 2028.

Amazon leads in warehouse automation and has surpassed Walmart to become the largest company by annual revenue in the U.S., increasing pressure on Walmart to accelerate delivery. The supply chain head stated that they are currently at a "peak of complexity."

In market dynamics, Walmart is both Symbotic's largest customer (accounting for about 85% of its revenue) and a shareholder, meaning that the costs of malfunctions primarily fall on Symbotic, while Walmart benefits from successes; independent automation suppliers and manual warehouse workers are under pressure, while Walmart locks in its technological path through shareholding and order commitments.

The renovations mainly target outdated warehouses from the 1980s and 1990s and are being carried out during ongoing operations, with progress lagging behind original targets.

Source: Public Information