Costco Wholesale Corporation has bought national logistics company Innovel Solutions for $1 billion, boosting the retailer's delivery capabilities as demand for services continue to expand.
Innovel Solutions has been helping retailers like Costco and Sears transport bulky items to customers for years. Innovel was an affiliate of Transform Holdco LLC, which operates Sears and Kmart.
The Issaquah-headquartered Costco has been an Innovel customer since 2015, with 786 warehouse clubs scattered worldwide. "We have had a great partnership with Innovel and shared a goal to look after our clients," said Costco chief executive officer Craig Jelinek, adding that the company believes its acquisition of Innovel will allow them to expand their sales of 'large and bulky' goods at a faster pace.
For many years, Innovel has provided Sears with "last mile" distribution of bulky products throughout the United States and Puerto Rico, along with installation and other support services." Innovel's supplied and serviced items include big appliances, chairs, mattresses, televisions, grills, pool, fitness equipment, and wine cellars.
According to Turn Heldco, Innovel will continue to serve Sears and Kmart as well as other third party customers under Costco's management, and will also retain employees of Innovel.
Costco's revenues have been "off the charts" since the start of panic shopping sparked by concerns about the dreaded coronavirus, Chief Financial Officer Richard Galanti said earlier this month during a second-quarter earnings call.
In February, the company reported revenue of $12.2 billion, up 13.8 percent from $10.72 billion in 2018. The Northwest, Texas and the Midwest had the highest sales. Sales were high internationally in Taiwan, Japan, Spain, and Mexico.
Innovel disclosed it could reach 100 percent of continental U.S. clients on its website. The company said it provides a 24- to 48-hour delivery capability for 85 percent of households and 93 percent of orders, and makes more than 4 million deliveries a year, with 1,100 trucks on the road daily.
With more than 1,500 staff, Innovel operates 11 distribution/realization centers and more than 100 final-mile cross-dock centers with a storage capacity of 15 million square feet more. The firm also maintains dedicated call centers.
Costco's purchase of Innovel comes as other major retailers - such as Target, Amazon, The Kroger Cos., Walmart, Albertsons Cos., Ahold Delhaize USA, Publix Super Markets, HEB, and Dollar General - boost their production, logistics and delivery capabilities to meet the demand for fast-growing product categories and adapt to a so-called evolving omnichannel market infrastructure.
