Micro-fulfillment distribution tactics are going through a potentially big shift. The Wall Street Journal reports that Fabric, which operates small, automated distribution centers in densely-populated areas, is cutting its workforce and shifting its business strategy as grocers and retailers look instead to add automated operations inside stores.

The company will now sell its warehouse automation platform rather than build more specialized small distribution sites.

The push toward micro-fulfillment centers accelerated during the pandemic as online retail sales demand grew and companies looked for ways to deliver goods to customers faster. 

Fabric’s pivot suggests the business is ebbing as merchants hone their ability to use their stores to fill online orders. The shift makes the niche logistics business the latest to gain traction during the COVID-19 pandemic but lose momentum as consumers have resumed pre-pandemic buying habits.