Supply Chain Startup: Automating the grocery store at Alert Innovation

John Lert, founder of the automation startup Alert Innovation in North Billerica, Massachusetts, has been re-imagining the grocery store since 1994. The idea then was to automate the vast center of the grocery store where the dry goods are stocked. Instead of you and I pushing a cart through the aisle to get our cereal, soup and peanut butter, all those items would be stored in a machine that could assemble the orders for us. Self-service would be limited to fresh products.

“This was 1994,” recalls Lert, “so I was imaging software catalogs on a computer that would dialup a modem. I realized that if it worked, it would be a quantum improvement in customer experience and could be a more efficient operating model since you could eliminate clerks.” The concept, he adds, drove the rest of his career.

The fact that Lert has been working on this idea for some 26 years makes him unique. Afterall, many of the startup founders I’ve been talking to were in elementary school in 1994. Lert, on the other hand, is 74, and Alert Innovation is his second significant startup in the last 20 years. “This is not an old man’s job,” he jokes, “but it is what I have to do. I’m fortunate to have a really great team, and I love my work.”

The concept was obviously ahead of its time in 1994. Mini-load AS/RS systems and conveyors, the technology du jour for automatically handling cases and totes, would never work in a supermarket. Instead, Lert went to work in the data collection industry for Symbol Technologies, now part of Zebra. But, the idea never went away.

Fast forward to 2001, and mobile robots, like those from Kiva, and goods-to-person picking solutions were coming to market. Lert started thinking about adapting his original concept to the distribution center. “I thought mobile robots could automate case picking, which I knew was a problem,” Lert says. While Kiva’s robots moved horizontally across the floor, Lert envisioned a mobile robot that could move vertically in the storage and retrieval space and more easily fit in an existing space. He approached C&S Wholesale Grocers, one of the largest wholesale grocery company in the country, which funded the company now known as Symbotic. They spent 2-1/2 years developing the technology, which is now used in a number of wholesale grocery distribution centers.

Lert sold his interest in the company in 2009 and left in 2011, convinced more than ever that the idea of automating supermarkets was a winner. What he wanted to develop was something he calls a three-dimensional shuttle, or an Alphabot®. Lert describes the first shuttle systems to come to market as 1D technology – the shuttles were captive in a lane, delivering their load to an elevator. Next was 2D technology, where the shuttle could exit the lane but still relied on an elevator to get to another level. A 3D shuttle is capable of moving forward and backward, sideways and up and down within the storage structure. You can watch a video of the concept here.

The company was formed in 2013 and funded by Lert. In 2014, he was joined by Bill Fosnight, his co-founder and chief technology officer. By 2016, when they signed a Master Joint Development Agreement to secure R&D funding from Walmart, they had a prototype of the Alphabot®. “Long before someone coined the term micro-fulfillment, Walmart was looking the world over for a technology for their stores,” Lert says. “I believe they were the first retailer to conclude that to be profitable in online grocery, order fulfillment at the store level had to be automated.”  According to Lert, Walmart does not have any ownership in Alert Innovation and Alert is commercializing the automation technology with other grocery retailers.

The first implementation went live in a Walmart Supercenter in Salem, New Hampshire in March 2019. “It took us five to six months to run sample live orders and test the integration,” Lert says. The system has been in full production mode since January 2020. A second Alphabot® system went live in August 2020 in a Walmart Supercenter in Rogers, AR.

Micro-fulfillment is still a new concept, and a number of automation companies have jumped into the fray. Grocers appear to be taking a throw-it-against-the-wall-to-see-what-sticks approach to the problem. And, there’s still a lot of learning to be had: What’s the right percentage of SKUs for automation versus store picking; how many square feet should be devoted to automation; should a grocer adopt a hub and spoke model, where automation is installed in a large space in one store that then services all the stores in say a 30-mile radius; and finally, how do you replenish the system?

I asked Lert what’s the most important lesson he’s learned from a second startup. “The biggest lesson I learned from Symbotic was the importance of your company culture,” he says. “After I left, I really thought a lot about how you design a company to be successful and scale but still retain its innovation.”

He adds: “I’m more comfortable in the role of inventor than CEO or entrepreneur, and I’ve come to think of the company itself as an invention.” 

SCMR’s Supply Chain Startup Blog is published every Friday. If you’re a startup, a venture capitalist or a supply chain practitioner working with startups, and want to share your story, or have startup news to share, email me at [email protected]. Remember that the purpose is not to promote any one firm – and a blog shouldn’t be interpreted as an endorsement of a firm or its technology. Rather it’s to start the dialogue between me, my readers and the people creating the NextGen Technologies that will power tomorrow’s supply chains.

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