March 25, 2014

Wal-Mart shifts reporting of supercenter backrooms to logistics division

Move positions supercenters to become de facto DCs.

By Mark B. Solomon

Wal-Mart Stores Inc. has shifted reporting responsibility of its 3,288 U.S. "supercenter" backrooms to its logistics division from store management, according to an individual familiar with the matter.

The move, which took place with no fanfare, is a sign that Wal-Mart is preparing its backrooms to play a major role in its battle with Amazon.com for e-commerce supremacy, the person said.

Many traditional retailers are reshaping their backroom operations to meet the challenges and opportunities of omnichannel retailing where online orders can be fulfilled from multiple locations to meet the growing delivery demands of businesses and consumers. A backroom that was traditionally used to stock inventory for a store can now be repurposed as a de facto distribution center where a product can be picked, packed, and delivered to a customer who placed an online order.

This new imperative could explain why the control of the backrooms at Wal-Mart's supercenters—which sell both groceries and dry goods—now falls under the oversight of its logistics operation.

The Bentonville, Ark.-based retailing giant has said it believes its enormous bricks-and-mortar network gives it more delivery flexibility and depth of coverage than e-tailers like Amazon that lack physical stores. Wal-Mart has 4,835 stores in the U.S. It also operates 172 distribution centers, 5,954 tractors, and more than 59,000 trailers.

Kevin X. Jones, Wal-Mart's vice president-inbound transportation, declined comment other than to say at last week's Georgia Logistics Summit in Atlanta that "there are a number of initiatives under way to improve the backroom flow."

Separately, Jones said Wal-Mart has no plans to abandon either FedEx Corp. or UPS Inc. as transportation providers. "UPS and FedEx are great partners and they supplement our network," he said. Wal-Mart operates one of the nation's largest private fleets.

Earlier this month, DC Velocity reported that Amazon was working on a major revamp of its transportation strategy under which it would operate its own fleet of trucks in major U.S. markets and supplement that network with a mix of carriage provided by regional parcel carriers and the U.S. Postal Service.

UPS, which today handles much of Seattle-based Amazon's current deliveries, will not play a prominent role in the network realignment, DC Velocity reported. Nor will FedEx Corp., which manages a lesser portion of Amazon's delivery business.

About the Author

Mark B. Solomon
Executive Editor - News
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

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