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Jan. 28, 2021, 2:22 p.m. EST

Walmart adding dozens of automated local fulfillment centers to speed delivery and pickup orders

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Tonya Garcia

Walmart Inc. /zigman2/quotes/207374728/composite WMT -0.96% announced plans early Wednesday to expand its local fulfillment centers to dozens of new stores.

The local fulfillment centers will operate in stores or in additional spaces built onto stores. The automated facilities will feature robots that help Walmart associates pick and pack orders for delivery or in-store pickup.

In a call with media, Tom Ward, senior vice president of customer product for Walmart U.S., did not give specifics about how many of these local fulfillment centers would ultimately be built or provide other efficiency metrics, like time saved. Some orders can be prepared in “just a few minutes from the time the order is placed,” he said in a post on the company blog. 

Walmart began piloting these facilities in 2019 in Salem, N.H.

Rather than store associates walking store aisles in search of items, machines zip across the mini-fulfillment center pulling merchandise. This frees up workers to pick grocery items like produce and meat, as well as large merchandise on a customer’s shopping list.

Alert Innovation worked with Walmart on the pilot of the automated fulfillment center . Walmart will continue to work with that company, as well as Fabric and Dematic on the new facilities. These companies will also help Walmart analyze new innovations and test features.

Target Corp. /zigman2/quotes/207799045/composite TGT -6.77% has discussed the benefits of in-store pickup and speedy fulfillment extensively during its recent earnings reports.

Read: Target’s holiday sales show the importance of stores even as COVID-19 drives business online

Also: Target partners with Levi Strauss for lifestyle collection, invests $200 million in employee bonuses

While Walmart offered few metrics on the success for its local fulfillment centers so far, Ward said during the media call that the retail giant has increased the number of slots for in-store pickup and other fulfillment options by 40%.

The coronavirus pandemic has sparked increased e-commerce, with many customers opting for either home delivery or store pickup rather shopping in stores.

Ward said Walmart doesn’t expect these sorts of consumer behaviors to wane once the pandemic ends. Walmart also plans to add automated pickup sites in some stores.

Don’t miss: Walmart testing grocery delivery technology with HomeValet ‘smart box’

UBS says the mini-fulfillment centers could be “a game-changer.”

” We estimate that 40%-to-50% of its online business comes from pickup. Thus, it has ample opportunity to improve the profitability of digital by automating the picking and packing of these orders,” analysts led by Michael Lasser wrote.

” Further, a single local fulfillment center can also serve nearby stores, amplifying its impact on a local market. We see this playing a key role in helping to bring digital to profitability in the next few years. “

UBS rates Walmart stock buy with a $165 price target.

Walmart stock has gained 23.8% over the past year while the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.46% is up 7.4% for the period.

/zigman2/quotes/207374728/composite
US : U.S.: NYSE
$ 130.11
-1.26 -0.96%
Volume: 9.74M
March 2, 2021 4:00p
P/E Ratio
27.47
Dividend Yield
1.69%
Market Cap
$371.68 billion
Rev. per Employee
N/A
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/zigman2/quotes/207799045/composite
US : U.S.: NYSE
$ 173.49
-12.60 -6.77%
Volume: 22.09M
March 2, 2021 4:02p
P/E Ratio
22.99
Dividend Yield
1.57%
Market Cap
$93.19 billion
Rev. per Employee
$212,261
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/zigman2/quotes/210598065/realtime
US : Dow Jones Global
31,391.52
-143.99 -0.46%
Volume: 341.28M
March 2, 2021 5:08p
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