Inside Save A Lot’s Automated Micro-Fulfillment Center Powered by Fabric

Hello, everyone.

This is Omnitalk Retail.

I'm Chris Walton.

And I'm Anne Mazinga.

And we are kicking off our live NRF coverage on Saturday morning.

Ann, it's Saturday morning.

We're getting the early bird, gets the.

Grocery order, gets the robotic worm, I guess today.

And as you're gonna see in a second, because we are kicking off our coverage from one of the coolest facilities we have toured in quite a while, Ann and I are standing right in Save A Lot's new micro fulfillment warehouse in Brooklyn that is powered by Fabric.

And joining us today to tell us what it's all about.

To tell all of you what it's all about is Jonathan Murav, Fabric's VP of Sales.

Jonathan, welcome to omnitalk.

Welcome to Brooklyn.

Thanks for having me.

Thanks, man.

Yeah, I've only been here a few times.

It's good.

It's a good place to be, though, on a Saturday morning.

Snowy Saturday morning, no less.

Very snowy Saturday morning.

Yeah.

Well, let's start.

Tell those who might be meeting Fabric for the very first time in this beautiful space.

Tell our audience about Fabric and the company's kind of background.

Yeah, sure.

So Fabric's a fulfillment automation technology company focused on unlocking some of the largest problems in retail.

More specifically, unlocking profitable on demand e commerce grocery delivery for grocers in North America and globally.

And how long have you been working with Fabric?

How long has the company been around?

Yeah, so the company's about nine years old now.

I've been going on my sixth year now with the company.

So you've been through it for the whole journey?

I've been around for a long time.

I've seen it all.

It's been a great run.

And have had leadership positions across operations, strategy, and now leading the sales organization.

And tell us a little bit about where Fabric currently has installations, because we're going to talk about this one particularly because there's a lot of aspects that are unique.

But talk about what you've learned over the course of the time at Fabric that's enabled you guys to put this installation in place.

Yeah.

So I think, you know, Fabric was founded as a technology company, but we're not only a technology company.

So we actually started as a company that actually operates the sites that we build.

Okay.

So early on in the process, we built a very strong operating muscle and that what allowed us to do is actually feel the pain that our customers are feeling.

The operators.

Yeah, that the operators are feeling.

And take those learnings and put them back into Our product development from firsthand experience.

Right.

And I think that's a really powerful distinction that we have against some of the other folks that we compete with in the space.

And you see that evident in the product that we've deployed.

And our customers tell us, wow, this is exactly what we need.

Yeah, so you're eating what you cook, so to speak.

That's it?

Yeah, that's it.

We love that.

We love people that eat what they cook.

It's kind of our mantra here at Omnitok.

All right, so we're standing in this pretty brand new Brooklyn warehouse facility that you guys are powering for.

Save a lot.

It's pretty impressive.

You guys can see if you're watching like there's robots moving here behind us in the background.

What is so unique about this site particularly?

Yeah, so I think first and foremost, we are literally in the heart of Brooklyn, New York, probably the densest part of.

You know, we thought that when we.

Were pulling up our Lyft driver was like, do you know where you're going?

Yes, we do know where we're going because yeah, there's restaurants, there's housing.

We are surrounded by 2 million people.

We are within 30 minute reach of 2 million people.

Wow.

Okay, so this facility serves all of Brooklyn from this one location and walking down the street, you would never imagine that behind the two rolling gate doors that have graffiti on them, that there's this state of the art robotic automation technology that is fulfilling on demand 30 minute delivery to the whole of Brooklyn.

That's crazy.

Okay.

Yeah.

And so, and so like it's.

This building looks pretty old too.

Right?

Like, so why, why is that such an important factor here?

Like in terms of what you're able to do and where you're able to put this?

Yeah.

So we've designed a modular, easy to deploy system that can be deployed in what we call atypical spaces.

Okay.

Atypical spaces.

So we were, we were designed or we designed a system to be able to be deployed in very dense urban areas.

Okay.

Backs of stores.

Think like a big box grocery store anywhere across the country.

And we also run the gamut.

We could actually go into like very large warehouses.

And so we go from what we call nano to kind of a more macro model.

Right.

And that's really interesting because when you start to think about solving for on demand grocery, proximity to your end customer is absolutely key.

Right.

You can't do that in some large warehouse that's an hour outside of the city.

Right, right.

And so we built this system In a way that allows us to deploy it in a building that's literally 100 years old in the heart of Brooklyn.

And how big is this facility, Jonathan?

And then also I'm curious too, like, like how do the dynamics of cold and fresh and all that.

Yeah, great question.

Yep.

So the facility is 7,000 square feet, which actually for us is a little bit larger on the nano side of the equation.

Our true nanos run about 4,000 square feet and can drive kind of top line sales of $10 million a year through the system, which is really, really amazing.

And I think what's really interesting about what we built here in Brooklyn, it's the world's first fully automated tri temperature zone automated grocery facility.

And what does that mean?

So what that means is that all of the goods are in automation, ambient, chilled and frozen, all stored in automation and picked via all in these bins behind us.

All in the bins behind us across multiple temperature zones.

Same size bins, roughly.

Yeah, yeah, same size bins, roughly frozen totes that keep the goods frozen, you know, indefinitely.

And what that really allows us to do is drive a really lean model because where grocers struggle the most is pulling together all the disparate elements of an order from the frozen section of the shopping floor, from the ambient section, from the chilled section.

And that takes a lot of labor and a lot of money.

And that's where a lot of the losing economics of the online grocery model reside.

And our tri temperature zone really cuts that down to a bare bones labor footprint.

Wow.

Yeah.

Yeah, We've been in, in facilities similar to this before, but yet they were not.

You could do the ambient goods, but it was, it was manual after that process.

So it is really cool to see, you know, being able to have the same racks, the same kind of tote system set up for all three of those conditions.

Well, I'd love to hear a little bit more about the process from the Save A Lot side.

Like tell us a little bit about what Save A Lot Save A Lot's getting from this type of operation.

And if I'm understanding correctly, like as a customer, maybe walk me through the customer process and then understanding like the benefits from Save A Lot's perspective.

So I order through Uber Eats.

Is that.

Yeah.

So the end customer is shopping exclusively on UberEats today.

We'll probably bring on some additional marketplaces in the near future.

Sure.

So a customer will go on the Uber Eats application, find the Save A Lot storefront, hopefully listed right at the top.

Right.

And I think we're seeing that more and more now, which is really great because the customer feedback has been fantastic.

And I think Uber algorithms are picking up on that.

And they'll do their shop like you do on any other application.

Right.

They'll pick what they want.

That order comes into this facility, the robots get to work to start collecting.

All the elements of that order will have pickers who actually select those goods at the station, making sure that the goods are of high quality, of precious quality to go out to the end customer.

They bag them.

And then right over here we have an Uber Eats driver who just arrived, literally just walked in, just walked in, and within a few minutes they come to pick it up.

You know, a typical order of 50 items gets picked within five minutes.

So.

And Save A Lot doesn't have a lot of bricks and mortar locations in this area.

So explain a little bit about what this is now enabling.

Like if I'm an Uber Eats customer and I go on and I see that I have eggs in there, a good price, and I'm ready to pull the trigger.

And now I'm shopping Save A Lot and I'm.

Yeah, so.

So what this has enabled for Save A Lot is the ability to go into a market.

Yeah.

Literally the largest market in the country.

Right.

Which happens also to be the most expensive market in the country in a way that makes economic sense for them.

Right.

So if you think from a grocer's point of view, they need to now go into Brooklyn, if that's where they want to be.

Yeah.

Find two acres of land with a lot of parking spaces, you know, pay tens of thousands of dollars a month.

Right.

For that facility.

And that just doesn't work with the Save A Lot business model as a discount grocer.

Right, right.

And so what we've given them the ability to do is enter a new market in an economic way that makes economic sense to them.

Yep.

Get brand exposure to the large.

In the largest market in the country.

Yeah.

And hopefully also drive like significant top line sales because they're in this really dense area where there's high demand for the types of groceries that they're offering to the market.

So, Jonathan, so for context, where is the nearest Save A Lot store?

It's about an hour from here.

That's like two.

And then beyond that, it's like probably 10 hours away is the nearest one.

So this is truly like in terms of brand exposure, it's a brand new market for them.

Right.

A lot of customer education has gone into it.

And after about 12 weeks now we're happy to say that we're seeing like really compelling traction from the market.

And what is the addressable market size that you think that you're able to meet from this type of installation?

Yeah, so, you know, there are 2 million people who live in Brooklyn.

You know, we think we're probably interesting for at least six to 700,000, 600, 7,000 of those people.

Now when you're talking about that relative to the volume that this site needs to get out to kind of meet interesting economics.

You know, this site's designed to do about 350 orders a day.

Okay.

So there is just a lot, you know, very like you can get to a very low percentage of penetration in the market and still make this a really compelling offering.

Right, right.

Wow.

It's super interesting.

So last question we have for you, we'll get you out here on this because I think it's a good capstone question is, you know, we've seen a lot of starts and stops in the micro fulfillment arena over the last.

Since we've been doing this eight years.

Yeah.

But it's always been something that we've been interested in, keenly followed.

We've been interested to keenly follow it as well.

This is really unique, really new.

What is your take on the continued evolution of micro fulfillment as a concept?

Where do you think it's going to go next?

Yeah, so I mean, fabric's been at the forefront of this new and innovative industry now for nine years.

I actually think we were the ones who coined and copyrighted mfc.

Oh yeah, right.

Patent pending.

Yeah.

No, no, I'll take your word for it.

I'm kidding.

Don't fact check me on that.

No, I think it's true.

I think it's true.

So we've kind of had a front row seat to the evolution now like any new industry and any new technology and any new innovation, it's going to go through its ebbs and flows in terms of maturity, rate of market adoption, first movers and then followers.

Yeah, right.

And I think, you know what we're, you know, I truly feel that we're at this inflection point where both the grocers and the technology are now ready for meaningful scale.

Right.

And now that's, you know, after a nine year journey.

Right.

And it's taken some time, but.

Right.

And I think like the marketplace adoption too has got to be up from the consumer side too, more so than it was.

Where it makes it easier to go.

Into a new market demand aggregation marketplaces out There in place.

Yeah.

Really amazing point.

That's been a big boost as well.

Sure.

Yeah.

How did the pandemic impact things, good or bad, in terms of the evolution of the mfc?

Yeah.

I mean, obviously it accelerated kind of market penetration for E commerce grocery.

First and foremost, it bought a lot of eyeballs to that segment.

I think the penetration rate was like 4% before the pandemic.

Now it's like north of 10%, 12%.

And during the pandemic, as high as like, 25%.

And obviously, on a store by store basis, you know, that penetration can go to 20, 30%.

Right.

So first and foremost, it just bought a lot of eyeballs to the segment.

And that's created, I think, an impetus for grocers to start to move.

Yeah.

Because this has become a more meaningful part of their P and L.

Right.

Which they can no longer afford to ignore because they're actually losing money on these orders.

Right.

And so it starts to eat into their gross margins.

And so now it's kind of compelled the grocers to start to move in a more aggressive way.

And, Jonathan, is that something that you would say is one of the most important things when you're talking to new potential clients?

Like, is that the most important problem that they're trying to solve right now and why they're kind of reaching out to fabric?

Yes, I think, like, you know, in terms of, like, prioritization, I mean, first and foremost is how can I be more competitive and gain market share against the guy across the street?

Oh, really?

Okay.

Right.

All right.

Two is like, how could I optimize my existing P and L and, you know, just make more with less, be more efficient.

Yeah.

So it's market share first and then profitability second.

That's interesting.

I wouldn't have thought that.

Yeah.

Because grocers are really concerned about, you know, know, how do they compete against, you know, the next guy.

Right, right, right.

Yeah.

It's a very, very competitive space.

Yeah.

All right.

Well, man, this was so awesome.

Yeah.

This is such a great kickoff to our coverage at nrf.

It's Saturday morning.

I mean, I imagine people are going to be watching this, probably going to want to reach out, get tours themselves for those that are here in New York, maybe even after the show, after the conference as well.

For sure.

People are interested and they want to do that.

What's the best way for them to do that?

Jonathan?

Yeah, sure.

So you can find me on LinkedIn.

Jonathan.

J O N A T H A N.

Last name Morav.

M O R A V.

Find me on my LinkedIn, shoot me a DM.

You can shoot me an email, Jonathan moravetfabric.com or you can just find us on our website, getfabric.com and send us a message through there.

Thank you so much.

Yeah, Jonathan, thank you so much.

Thanks for opening the doors to us today.

We're happy to have you.

Saturday morning in January in New York.

It's cold in here, too, right?

It's nice, but it's nice.

It's very nice in here compared to outside.

So thank you for opening the doors.

My pleasure.

It's been a great experience.

Great getting to talk to you and Anne, as always.

Be careful out there.