Walmart is converting empty stores into delivery hubs, further shortening the last mile between the retailer and the consumer.
A report from the Financial Times highlighted that the retail giant has already opened three Walmart “Depots” in Dallas, New Jersey and Arkansas, while bringing attention to other local reports that the company filed applications with multiple other municipalities nationwide.
Tests at the Dallas location were previously reported last summer.
According to various reports, potential future locations include former Rite Aid pharmacies in New York and California and a facility previously occupied by a Goodwill secondhand store in Virginia.
Walmart has not released any information publicly about these facilities, or how many locations the company plans on opening.
In a document submitted to town officials for a proposed depot in Poughkeepsie, N.Y., Walmart said the locations are not open to the public. The stores will be roughly 20,000 square feet and exclusively accessible to gig workers using the retailer’s Spark delivery driver app to collect orders and bring them to customers.
The depots only stock high-demand household items and are overseen by managers at nearby Walmart Supercenters, according to the document.
“It effectively just looks like a small grocery store or a drugstore. The shelves are filled with products. Outside it’s not branded anything,” Jason Klipa, a Walmart government relations director, told a public hearing in Poughkeepsie in April.
According to Klipa, the stores host the top-selling items held in a typical Walmart store, which can contain about 120,000 products.
The New Jersey depot opened in a small unbranded industrial facility in Carlstadt, with municipal records indicating that contractors added storage racks and refrigerators inside. The retailer’s Spark drivers walked out with shopping carts loaded with milk, juice, breakfast cereal and paper towels, FT reported after visiting the site.
The only indicator that the store is affiliated with Walmart is the notice on the location’s front door, which says “Spark driver entrance.”
The driver who picked up the goods told FT that grabbing items in the location takes roughly five minutes, while the same trip to a Walmart Supercenter store could take 25 minutes.
A third depot recently opened in Fayetteville, Ark., while locations are expected in San Diego, Calif. and Manassas, Va.
According to FT, Walmart is speaking to landlords and brokers about opening more depots in the New York metropolitan area, Florida, Nevada and the Pacific Northwest.
Walmart’s supply chain overhaul has been a top driver of its e-commerce acceleration, with the company now touting 30-minutes-or-less delivery in some cases. When customers choose the retailer’s Express Delivery option online, goods get delivered to the end stop in under an hour on average, says Walmart CEO John Furner.
In its most recent quarter, Express Delivery grew more than 60 percent from the year prior, illustrating that demand for the expedited offering has been expanding. And consumers are buying more as they get comfortable with the delivery options, as sales through thee expedited store-fulfilled channels increased more than 50 percent annually.
The recent tests have coincided with efforts from Amazon to bring a similar “ultra-fast” delivery experience to shoppers.
The Amazon Now delivery service, which had piloted in select cities like Seattle and Philadelphia since late last year, was expanded to cities including Denver, Minneapolis and Houston earlier this week, giving “tens of millions” more customers access to 30-minute delivery on 90,000 products.
Like the Depots, Amazon Now will fulfill online orders from smaller specialized facilities strategically placed close to where customers live and work. The offering is designed to reduce the distance delivery partners need to travel, enabling faster delivery times.
While Amazon Now will rely on advanced inventory systems that optimize product placement based on local demand, Walmart has not divulged how technology solutions will help assort its depots.
The move comes as the company is cutting or relocating roughly 1,000 corporate employees upon streamlining technology operations for its three major business units—Walmart U.S., Sam’s Club and its international division.
According to an internal memo to employees Tuesday, the segmentation of employees often led to duplicate or redundant work, with different teams working on similar projects.
“Ultimately, we’re designing a team that’s set up to move faster, scale what works and deliver better experiences for customers and members everywhere,” the memo said.
Employees with the option to relocate can move to the company’s headquarters in Bentonville, Ark. or its Northern California office.
