The Competitive Shift Reshaping Material Handling: How to Strengthen Your Position in a Rapidly Expanding Market
By MHEDA
Competition in the material handling industry is no longer limited to traditional players. Companies are facing increasing pressure from adjacent industries entering the market, bringing new capital, technology expertise, and different go-to-market models.
This shift is about more than an uptick in competitors. It reflects a structural change in how customers evaluate solutions, how pricing pressure emerges, and how value must be clearly defined and communicated.
This article examines the forces driving increased competition, why new entrants are moving in, and practical strategies members can use to protect margin, strengthen differentiation, and compete with greater clarity and intention.
Why the Competitive Landscape is Expanding
Several converging forces are driving increased competition across the systems integration and storage & handling segments.
Market growth is attracting capital. The warehouse automation market continues to expand rapidly, fueled by sustained demand for warehouse modernization, e-commerce fulfillment infrastructure and integrated systems. High-growth markets rarely remain exclusive for long. As opportunity increases, so does outside interest.
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- Private equity and consolidation are accelerating. Businesses providing Industrial automation and supply chain technology solutions are increasingly attractive investments due to scalability, digital transformation momentum, and recurring revenue potential. Sustained M&A activity has contributed to the rise of larger, well-capitalized competitors with the ability to scale quickly. Access to capital allows newer entrants to expand through acquisitions, compete more aggressively on price, invest heavily in sales and marketing, and broaden service offerings faster than organizations relying solely on organic growth.
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- Industry diversification. Competition is expanding from within the material handling industry itself. As growth opportunities emerge, companies in adjacent segments are diversifying into new areas. While this diversification can create new revenue streams, it also introduces significant complexity. Systems integration and storage & handling projects require specialized engineering depth, project management discipline, and operational expertise that may not be immediately visible from the outside. Established companies with long-standing relationships and deep application knowledge often hold an advantage here by creating a differential for themselves, setting them apart from the increasing number of “total solution providers.”
Technology expectations are reshaping buyer criteria. Digital transformation is influencing how customers evaluate partners. Buyers are placing greater emphasis on software interoperability, data visibility, cybersecurity, and seamless integration across multiple technology layers. Organizations entering from adjacent technology sectors often lead with software-first value propositions. While they may not have decades of material handling experience, they frequently bring digital capabilities that align closely with evolving customer expectations.
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- Integration complexity creates both opportunity and exposure. Many facilities still operate with partially integrated systems across warehouse management and control systems, robotics, and material flow technologies. This complexity presents meaningful opportunity for experienced integrators with deep execution expertise. At the same time, it invites new competitors. Robotics manufacturers are offering direct integration services. Software companies are expanding into hardware partnerships. Consulting firms are bundling advisory services with implementation.
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- Labor shortages are increasing automation urgency. Persistent workforce challenges in warehousing and logistics continue to accelerate investment in labor-saving technologies. Automation is no longer viewed solely as a long-term optimization strategy; for many organizations, it has become an operational necessity. Heightened urgency draws additional solution providers into the market, further intensifying competition.
Competition is expanding in both breadth and scope. More players are entering the market, and more players are broadening what they offer.
The Impact: Margin Pressure and the Talent Tug-of-War
In fast-growing markets like industrial automation, competition tends to heat up quickly. As new players enter the market, especially those backed by significant capital, they often focus on gaining share first and worrying about profitability later. That can create pressure for established firms trying to protect margins.
And it’s not just about pricing. Competition is showing up in the talent market, too. As adjacent industries move into material handling, they’re actively recruiting experienced engineers, project managers, and sales professionals from within the industry.
The ripple effect? Pressure on margins, pressure on hiring, and pressure on internal capacity, all at the same time.
Raising Your Competitive Game: Playing Offense, Not Defense
Increased competition does not eliminate opportunity. In many ways, it reinforces the strength and long-term potential of the market. Organizations that perform well in this environment will focus on clarity, discipline, and intentional positioning rather than reactive decision-making.
Sharpen differentiation. In a crowded field, clear differentiation becomes essential. Members should define, specifically and consistently, what sets their organization apart. That may include vertical specialization, engineering depth, lifecycle service support, regional expertise, or a proven project execution track record. Broad positioning statements are no longer enough. Customers are looking for evidence, specialization, and measurable value.
Invest strategically in digital capabilities. Digital fluency is increasingly foundational. Whether developed internally or strengthened through partnerships, organizations must demonstrate competency in system interoperability, data visibility and reporting, cybersecurity awareness, and software integration. But digital capability extends beyond the solutions being delivered. It also applies to how organizations educate, market to, and engage customers. Buyers increasingly conduct research online, expect clear digital content, and rely on virtual demos, data-driven proposals, and consultative sales tools before making decisions. Firms that combine strong physical infrastructure expertise with digital insight, both in execution and in customer engagement, will be better positioned to compete as buyer expectations continue to evolve.
Strengthen talent retention. Sustained investment in career development, leadership training, technical upskilling, and organizational culture supports long-term stability. Retaining experienced engineers, project managers, and sales professionals preserves institutional knowledge and reinforces customer confidence.
Build strategic partnerships. No organization can excel across every capability independently. Strategic partnerships with complementary software providers, automation manufacturers, and service specialists can expand solution breadth without requiring full internal buildout.
Key Takeaways
- Capital inflows, digital transformation, labor shortages, and automation demand are drawing new entrants into the market. While these dynamics create margin and talent pressures, they also reflect sustained opportunity.
- Winning organizations will stand out through clear differentiation, disciplined execution, smart digital investment, and a deliberate focus on developing top talent. Most importantly, they will compete intentionally, not reactively.
- The objective is not to outspend competitors, but to out-position them.
Sources
SellersCommerce –Warehouse Automation Growth Statistics
McKinsey & Company – The Top Trends in Tech, Global Private Markets Report
Deloitte – Manufacturing Industry Outlook, Autonomous Robots Supply Chain Innovation
U.S. Bureau of Labor Statistics – Warehousing and Storage Industry Data
