Walmart Launches Depots to Speed Home Delivery

Walmart (Bentonville, Ark.) is converting vacant retail spaces into compact, neighborhood-level stockrooms designed to accelerate home delivery across the U.S., the Financial Times reports. Dubbed Walmart Depots, the discount giant is using at least some now-vacant Rite Aid and Walgreens spaces for such operations. (Those two pharmacy chains and others have been closing hundreds of stores in recent years.)

Thus far, there are at least three depots, in Dallas, New Jersey and Arkansas, according to public filings viewed by the Financial Times, with additional sites being considered for California, New York, Florida, Nevada, the Pacific Northwest and Virginia

Each depot has roughly 20,000 square feet of space, holds frequently purchased household goods and is managed by a nearby Supercenter. The sites are not open to the public; only gig workers operating through Walmart’s Spark driver app can enter them.

The new mini-hubs are designed to addresses the so-called “last mile” conundrum facing home-delivery models; that is, it seeks to reduce the traditionally higher costs associated with completing the final leg of the journey of a good that’s been ordered online.

While the retailer’s roughly 4600 U.S. stores currently reach 95% of the country within a three-hour delivery window, the Financial Times notes, processing orders inside large Supercenters is slow and creates friction for in-store customers.

Walmart describes the initiative as a pilot program and seeks lease terms of five years or less to preserve flexibility in using such spaces, FT reports.