Walmart is set to transform its distribution network for perishable goods with the introduction of five new high-tech warehouses across the United States. This strategic move, aimed at bolstering the efficiency and speed of distributing temperature-sensitive products like milk, meat, fruits, and vegetables, is part of Walmart's broader effort to maintain its dominance in the grocery sector and enhance its online grocery business.
The retail giant announced that the new distribution centers (DCs) will be located in Wellford, South Carolina; Belvidere, Illinois; Pilesgrove, New Jersey; Shafter, California; and Lancaster, Texas. Collectively, these centers are expected to create around 2,000 new jobs, according to a blog post from Walmart.
The automation technology deployed at these new DCs is designed to double the storage capacity and process more than twice the volume of traditional DCs for perishable goods. This innovation will significantly increase the efficiency of handling temperature-sensitive products, ensuring faster and more reliable delivery to Walmart's 4,600 stores nationwide.
Dave Guggina, executive vice president of Walmart's supply chain, highlighted the precision and speed benefits of these automated facilities. "We know what we own, in what quantity and where it is, all in near real time," Guggina told CNBC. "And we know that at a level of proficiency that is significantly improved compared to manual processes or legacy software." This enhanced accuracy allows Walmart to better predict demand and reduce the need for excess inventory, known as "safety stock."
Walmart has already operationalized the first of these automated distribution centers in Shafter, California, and recently opened another in Lancaster, Texas, near Dallas. The remaining facilities in Wellford, Belvidere, and Pilesgrove are slated to become operational soon.
In addition to building new DCs, Walmart is expanding four of its existing facilities to include automation technology. These expansions, taking place in Mankato, Minnesota; Mebane, North Carolina; Garrett, Indiana; and Shelbyville, Tennessee, will each add approximately 500,000 square feet of automated space. The company is also retrofitting a legacy facility in Winter Haven, Florida, with the same technology.
This push towards automation is part of Walmart's strategy to modernize its supply chain and improve the efficiency of its operations. The retailer's capital expenditures for the year are projected to be between 3% to 3.5% of net sales, translating to roughly $22 billion. This investment includes not only the expansion of automation but also hundreds of store remodels.
By early 2026, Walmart aims to have about two-thirds of its stores serviced by some form of automation, and approximately 55% of its fulfillment center volume will be processed through automated facilities. The company anticipates that these changes could improve unit cost averages by about 20%.
The high-tech facilities feature automated storage and retrieval systems that can quickly grab items needed to restock shelves and assemble them into dense pallets for delivery. These systems also build customized pallets containing specific items required to fulfill online grocery orders, which can then be stored in the back of the store for exclusive use in these orders.
Walmart's commitment to automation is not only about improving efficiency but also adapting to changing customer behaviors. The company has seen significant growth in its online grocery business, driven by store pickup and delivery services, which contributed to a 22% increase in e-commerce sales in the U.S. in the most recent quarter.
While the introduction of automation will bring changes to the workforce, Guggina noted that Walmart, the nation's largest private employer with roughly 1.6 million workers, expects to maintain or even increase its overall number of employees. However, the roles and responsibilities of workers will evolve, with a likely shift from manual labor-intensive jobs to more supervisory positions and an increased need for truck drivers.
