Automation firm Attabotics sheds staff after securing Tesco deal

A warehouse automation company which is understood to have recently secured a major deal with Tesco is battling to avoid bankruptcy.

Attabotics Inc had secured an agreement with the supermarket to install a micro-fulfillment system to fulfil online grocery orders at one of its stores, after a two-year assessment of the tech by Tesco, according to supply chain and logistics consultant Brittain Ladd citing sources within Attabotics.

The Canadian company is to file a ‘notice of intention to make a proposal’ under the Canadian Bankruptcy and Insolvency Act, according to sources. This is an option that gives financially troubled corporations the opportunity to restructure their financial affairs, avoid bankruptcy and for creditors to receive some form of compensation for amounts owed to them.

On online forums, Attabotics employees said they were sent an email on Sunday night telling them not to come in to work on Monday. “They are done for. Everyone lost their jobs,” one wrote.

“What makes this story so interesting and tragic, is that Tesco recently entered into an agreement with Attabotics,” Ladd said, adding that sources at the company he had spoken to revealed “cargo containers loaded with the system from Attabotics [for Tesco] have been shipped to England and should arrive shortly”.

Neither Tesco nor Attabotics responded to requests for comment.

Attabotics technology

Attabotics was founded in 2016 by Scott Gravelle, and designs and manufactures robots that operate within a modular, three-dimensional storage structure. The technology integrates order picking, packing, and shipping into “extremely dense cube storage” that “minimises the traditional fulfilment centre footprint”.

It has received funding from Canadian state and national governments, including a $34m investment from the government of Canada in 2020. In 2022, it was selected by the United States Department of Defense (DoD) to install automated storage and retrieval technology as part of a trial. In 2023, it came to a “mutual resolution” with rival Urbx over a long-running patent infringement case.

While it had secured a handful of clients – including Canadian beauty supply retailer Modern Beauty, which installed the tech at two of its warehouses; luxury department store Nordstrom; and Canadian supplier Gordon Food Services – Tesco is by far the biggest potential partner.

Tesco has been involved in micro-fulfilment since 2019, when former Tesco CEO Dave Lewis unveiled plans to build a network of 25 ‘urban fulfilment centres’ (UFCs) in excess space within existing stores. The initial plan was for 25 UFCs to be built by the end of 2023, however this was soon scaled back, with the retailer saying it had dropped the target in favour of a “test and learn approach”. Tesco’s UFCs are understood to total seven in number.

The supermarket has worked with logistics automation company Dematic on the UFCs, but has called out other micro-fulfilment solution providers such as Takeoff Technologies in the past. In May last year, Takeoff filed for Chapter 11 bankruptcy relief, and its software assets acquired by its client, Australian supermarket Woolworths Group, for use in its micro-fulfilment centres throughout Australia and New Zealand.

“It’s possible that an investor could come forward and provide a cash injection to Attabotics or acquire the company at a significant discount,” said Ladd, adding that, “if Tesco is happy with the performance of the system, Tesco should acquire Attabotics’ intellectual property and hire a few Attabotics resources.

“Tesco can leverage Attabotics for their own needs, and also copy what Veloq has done. Tesco can launch ‘Tesco Grocery Automation’ and sell their technology to other grocery retailers. Asda should be the first in line,” Ladd added.

Late last year, Tesco subsidiary Transcend Retail Solutions – which provides store-pick online fulfilment solutions – signed its first deal, with New Zealand retailer Foodstuffs North Island. Part of Transcend’s offering is micro-fulfillment solutions to “help retailers build a profitable fulfilment operation that customers love”.