In 2020, as COVID-19 restrictions transformed consumer behavior, online grocery sales soared. Retailers scrambled to meet demand, with automated micro-fulfillment centers, or MFCs, emerging as a way to streamline fulfillment processes and reduce reliance on labor-intensive manual operations.
These compact, robotic warehouses, often located within or near urban grocery stores, offered retailers the ability to fulfill orders quickly and cost-effectively, addressing the surge in online demand.
However, by 2022, the momentum behind MFCs began to falter for reasons Interact Analysis discussed last year. As the pandemic eased, shoppers returned to physical stores, leading to a slowdown in online grocery sales.
Furthermore, the first-generation automated MFCs led to many unforeseen productivity inhibitors that dampened the potential return on investment (ROI). Rising inflation and interest rates compounded the issue, putting pressure on retailers to scale back capital-intensive investments.
Many MFC projects were shelved or delayed, and smaller players in the space struggled to stay afloat.
A renewed surge in 2025?
Fast-forward to 2025, and the narrative may have shifted once again. Several factors are breathing new life into the automated micro-fulfillment center market, driven primarily by an uptick in online grocery sales and bold moves by retail giants. This aligns with last year’s Interact Analysis projection, which suggested a modest uptick in demand in 2025, followed by a ramping up in 2026.
The surge in demand is largely driven by Walmart’s ambitious plan to deploy at least 400 automated MFCs across its network, equating to roughly 1 in 10 of its stores. To put this into perspective, our most recent projections suggest approximately 1,200 automated MFCs will be deployed cumulatively by grocers in the Americas region between 2025 and 2030, meaning Walmart will represent approximately a third of total demand.
Additionally, online grocery sales in the U.S. saw a substantial boost in the second half of 2024, further fueling interest in automation.
Adding to the momentum is the wildcard of Amazon. While a large-scale rollout of automated MFCs from the e-commerce giant hasn’t been confirmed, ongoing speculation suggests the potential for such a move, which could significantly elevate market projections and intensify competition in the sector.
Walmart invests $400M in MFC technology
Walmart’s plan to roll out 400 Accelerated Pick-up and Delivery (ADP) centers became apparent as Symbotic acquired the company’s Advanced Systems and Robotics unit in January of this year. It was formerly known as Alert Innovation before Walmart acquired it. This would suggest that approximately 1 in 10 Walmart stores would have one installed once the roll-out is complete.
The exact reasoning behind Walmart’s decision to sell its Advanced Systems and Robotics unit remains somewhat unclear. Reports suggest Walmart initially acquired Alert Innovation for $400 million, but the company was worth just $200 million later—a substantial $200 million loss on paper. However, we’ve identified four possible explanations for this decision.
1. Strategic synergies with Symbotic
Walmart’s Advanced Systems and Robotics unit likely aligns more closely with Symbotic’s operations than with Walmart’s core business. As Walmart holds a significant stake in Symbotic, the sale could unlock greater long-term value through synergies and operational efficiencies, even if it means a short-term hit to the unit’s valuation.
2. Challenges in selling to other grocers
It’s possible that Walmart intended to market this technology to other grocers, as the ‘Walmart Advanced Systems & Robotics’ website highlights the features, capabilities, and benefits of the solution.
If these efforts didn’t gain traction, transferring the unit to Symbotic—a company better positioned to sell the technology across the grocery industry—might have been the most pragmatic move, given Walmart’s ownership stake.
3. Favorable terms for future MFC deployments
It’s also possible Walmart negotiated advantageous pricing terms for the rollout of its planned 400 micro-fulfillment centers. Even a cost reduction of $500,000 per site (or a ~12.5% discount on the typical cost of an MFC) could bridge the financial gap between Walmart’s purchase price and the amount it recovered through the sale, effectively offsetting the apparent loss.
While Walmart’s deal to sell its Advanced Systems & Robotics group won’t single handedly drive the demand for automated MFCs, it will likely spur others to follow suit. Given the razor-thin margins associated with the grocery business, no one wants to be left behind.
4. Value in the software
We predict that the hardware associated with MFCs will be largely commoditized, with the real value coming from the software. Many of the first-generation MFC vendors positioned themselves as hardware companies that also happened to offer software, with very few even touching manual in-store fulfillment.
It has become apparent that the real value comes from the orchestration of the entire fulfillment process, from the manual picking to the consolidation of items picked manually and with automation, as well as the staging ahead of delivery and pickup.
It’s unclear to what extent the software IP was transferred over to Symbotic during the sale of Walmart Advanced Systems & Robotics. If the software used to orchestrate the overall fulfillment process remains proprietary to Walmart, then perhaps a valuation of $200 million is actually a very attractive deal.
Online grocery sales accelerate
The timing of Walmart’s investment aligns with a broader trend in the grocery market: the resurgence of online sales. According to recent data published by Bricks Meets Clicks, online grocery sales in the U.S. grew by 17.7% year-on-year in the second half of 2025.
Factors driving this growth include the increasing adoption of hybrid shopping models, where customers combine online orders with in-store pickups, as well as the growing popularity of subscription-based grocery delivery services.
This sustained growth in online grocery sales underscores the importance of automation in meeting consumer expectations for speed and convenience. Automated MFCs, with their ability to rapidly pick and pack orders, are increasingly viewed as a necessity for retailers looking to stay competitive.
Amazon’s Project Jupiter
Amazon’s fulfillment strategy is always difficult to predict. In 2014, Amazon launched its Prime Now offering; a separate retail service offering two-hour deliveries initially in New York, and then other major cities.
Following the pandemic and the end of the “rapid delivery” craze, Amazon shifted its focus to “sub-same-day” fulfillment, which used small areas of its last-mile “deliver stations” to hold high-velocity inventory for same-day deliveries.
Industry observers now speculate that Amazon is looking to roll out automated micro-fulfillment centers, referred to as “local vending machines” or LVMs, as part of “Project Juniper” or “Jupiter.”
It should be noted that this is pure speculation at this point, and we’re going off hearsay. However, we know that Amazon has been hiring engineers for micro-fulfillment since 2022, as we previously reported. If Amazon does indeed roll these out in 2025, this is likely to result in a myriad of other retailers looking to follow suit.
Although this isn’t part of our baseline scenario, the rollout of Amazon’s MFCs has the potential to significantly boost our forecast, which is why we’ve identified it as a key wildcard factor.
Final thoughts
While recent developments suggest a potential rebound in demand for automated micro-fulfillment centers, several challenges persist. Walmart’s large-scale rollout — revealed in documents following Symbotic’s acquisition of its Advanced Systems & Robotics division — could mark a turning point for the sector.
However, demand growth will likely remain modest in the short term, especially if Amazon doesn’t bring its MFC concept to fruition.
The key lesson we’ve learned from the slower-than-expected adoption of automated MFCs is the need for a strong product-market fit, ensuring solutions avoid hidden costs and unforeseen productivity inhibitors. With nearly a decade of retailer testing and trialing, automated MFCs may finally approach widespread viability.