Walmart is the largest grocery store in the United States, a position it wants to hold on to. To do this, it is changing the way its warehouses work.
How is Walmart changing?
Walmart is currently building a new distribution centre in California, mid-way between Fresno and Los Angeles, which will open in late 2020. When it does, Walmart says it will enable goods to be moved in and out of its warehouses 40 per cent faster than at present.
Why is Walmart changing?
The food business is enormous in the United States, with one-fifth of consumer spending going on groceries. Walmart currently has around 17 per cent of this market and wants to keep growing. To do this and to compete against new entrants to the market, such as Amazon, it has to keep innovating.
In recent years, as its market share for groceries has grown, Walmart has focused on how its food looks and how quickly it can get it to consumers, such as by using kerbside pick-ups and offering home delivery.
Keeping food fresh and of a high quality, especially when journeys across America can be so long, takes time, effort and money. Walmart hopes to reduce costs and increase profits with its new warehouse by cutting down the time it takes to process orders and deliver food. The company’s logistics senior vice-president, Tim Cooper, says that speed is the name of the game. With its new warehouse, it could very well increase this speed.
How will the new warehouse be different?
Walmart’s new warehouse will be highly automated. Robots will be used to reduce the time it takes to stack and load products, increasing efficiencies and maximising the use of space on trucks; in turn, this will reduce transport costs. Companies looking for similar efficiencies could consider the racking Ireland based companies such as rackzone.ie/pallet-racking/ offer.
The company is also looking at how to unload products faster. It is piloting micro fulfilment centres that will enable it to automate how groceries are picked for online orders. This will be a key growth area for Walmart in the coming years, with plans to increase the number of stores that let customers pick up groceries to 3,100 in this financial year. This is up significantly from 50 a couple of years ago.