Walmart is enhancing its efficiency as its online business grows. The retailer revealed on Wednesday that it will be opening five automated distribution centers to cater to increasing online orders for fresh foods across the country.
CNBC reported that the new facilities are approximately 700,000 square feet each. Both frozen and chilled goods will be managed with automation, storing and retrieving perishable items such as frozen chicken nuggets and strawberries, which will be sold in stores or added to customers' e-commerce orders.
Walmart is modernizing its supply chain to keep up with customers who opt for either home delivery or curbside pickup.
The largest grocer in the nation noted a 22% increase in e-commerce sales in its most recent quarter, primarily driven by store pickup and delivery services.
CEO Doug McMillon noted in April 2023 that over the next five years, the company expects profits to grow faster than sales, driven by the automation of supply chain facilities across the country.
Dave Guggina, Walmart's executive vice president of supply chain, said that automation provides a quicker and more accurate picture of inventory, helping to get products to stores faster.
"We know what we own, in what quantity, and where it is, all in near real time," Guggina said. "And we know that at a level of proficiency that is significantly improved compared to what we've been able to achieve with manual processes or legacy software."
Guggina also emphasized that the automated facilities provide more storage capacity and can process twice the volume that traditional sites can handle.
According to Walmart's website, the new facilities will collectively create around 2,000 jobs.
Reports indicate that automation is contributing to higher spending at Walmart. The company stated that its capital expenditure for the year is around 3% to 3.5% of net sales, approximately $22 billion, which is higher compared to the $12 billion the company has typically spent on capital expenditures.
Walmart noted that by early 2026, approximately two-thirds of its stores will be served by some form of automation, and around 55% of the volume of fulfillment centers will be processed through automation.
