Walmart is planning to set up small local warehouses staffed with robots to handle surging online orders, stepping up competition with Amazon as both companies seek to cut delivery time and costs by moving logistics closer to where customers live.

Walmart’s warehouses will sit within or next to existing stores and will use autonomous robots to fetch items such as boxed and frozen food for online orders. Human workers will handle more complex tasks such as choosing fresh produce or larger items. Orders will then be picked up at the store by customers or delivery workers.

“This whole process can take just a few minutes from the time the order is placed to the time it’s ready for a customer or delivery driver to collect,” wrote Tom Ward, head of customer product for Walmart US, in a blog post on Wednesday.

Walmart also plans to experiment with automated pick-up systems that would present the goods at a hatch once a customer scanned a code on their smartphone.

As well as handling groceries, the robots will be able to pack “thousands of the items we know customers want most, from consumables to electronics”, Mr Ward wrote.

The move turns local stores into so-called micro-fulfilment centres designed to lower the cost and time of “last-mile” delivery — the final, most expensive stage of an ecommerce order as it reaches a customer’s home.

The plans follow a surge in ecommerce business for Walmart during the coronavirus pandemic, with online sales up 79 per cent in the third quarter last year from the same period a year earlier.

However, costs have escalated as the retailer pushed ahead with plans to add kerbside deliveries to many of its US stores. It said more than 3,000 now have the capability.

Automation could reduce the cost of picking online orders by about 75 per cent, according to analysis from Jefferies.

Walmart’s bricks-and-mortar footprint is seen as a significant competitive advantage against Amazon, which while investing heavily in its last-mile network of delivery partners relies mostly on facilities located further away from customers than a typical Walmart store.

Amazon launched Amazon Fresh last year, a new chain of grocery stores designed to work as micro-fulfilment for orders. It has nine locations across the US.

“While Amazon Fresh looks and feels like a typical grocery store,” noted a recent floor walk report from analysts Brick Meets Click, “it appears to function more like a distribution hub for the fulfilment of online orders”.

Amazon has not discussed the use of robots at these stores, though floor plans submitted to local authorities in Los Angeles suggest the capability exists. The company relies heavily on robotics at large fulfilment centres.

Walmart said it had been piloting its micro-fulfilment concept at a store in Salem, New Hampshire, since 2019. The technology has been built in partnership with grocery robotics company Alert Innovation, Atlanta-based automation specialist Dematic and micro-fulfilment technology company Fabric, based in New York.

Walmart did not specify which of its stores would have robotics capabilities. An Associated Press report suggested that two stores in Texas, one in Utah and another near the company’s headquarters in Bentonville, Arkansas would be among the first.