Walmart Inc. WMT is committed to investing in the use of automation technology across its supply chain. The retail behemoth unveiled plans of constructing two high-tech facilities in the Dallas-Fort Worth area. Walmart will build a 1,500,000 square-foot automated fulfillment center, which will start operations in 2023. The other facility, projected to open in 2024, will be a 730,000 square-foot automated grocery distribution center. The Lancaster-based facilities will generate nearly 1,000 full-time jobs in the region.
The automated fulfillment and distribution centers will support Walmart‘s growing supply chain network. The combination of the automation technology and Walmart associates will aid the facility to operate more than two times the volume of a traditional fulfillment and grocery distribution center. The combination will enhance the quality, accuracy and speed of fulfillment and distribution of items.
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Earlier this year, Walmart announced intensions to doubling down on the use of automation technology across its supply chain. The company had previously revealed plans to introduce automation in over half of its regional distribution centers and automated market fulfillment centers in specific stores. In addition, Walmart has undertaken investments in drones and autonomous vehicles to assist in last mile deliveries.
Focus on Delivery Services
Walmart has taken robust strides to strengthen its delivery arm, which is evident from its investment in DroneUp; a pilot with HomeValet, the introduction of Carrier Pickup by FedEx, launch of Walmart+ membership program; drone delivery pilots in the United States with Flytrex and Zipline; and a pilot with Cruise to test grocery delivery through self-driven all-electric cars. Walmart had also unveiled an alliance with DoorDash in the third quarter of fiscal 2021 to deliver prescriptions from pharmacies of Sam’s Club along with expanding Scan & Go to all fuel stations at U.S. Sam’s Clubs. The company’s store and curbside pickup options add to customers’ convenience.
Walmart witnessed a slowdown in its e-commerce growth rate in the second quarter of fiscal 2022, as it lapped exceptional growth in the year-ago period. While U.S. e-commerce sales rose 6%, the rate of growth fell sharply from a 37% rise in the preceding quarter. The rate of growth plummeted from a 97% increase seen in the year-ago period, backed by the pandemic-led social distancing. Apart from this, supply-chain hurdles and wage-cost inflation are a concern for the company.
Shares of the Zacks Rank #4 (Sell) company have dropped 0.1% in the past three months compared with the industry’s decline of 0.7%.
Key Retail Picks
Tesco PLC TSCDY, sporting a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 26.6%.You can see the complete list of today’s Zacks #1 Rank stocks here.
The Kroger Co. KR, carrying a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 8.9%.
Costco Wholesale Corporation COST, carrying a Zacks Rank #2, has a long-term earnings growth rate of 8.7%.
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