Omnichannel Sales Driving Large Investments in Fulfillment Centers

Leading retailers are aggressively investing in new fulfillment centers to support rapidly rising omnichannel sales and ship orders directly to consumers.

Amazon added four new fulfillment centers in the month of October. Amazon now has a total of 44 such centers in North America.

Home Depot opened two direct fulfillment centers in Georgia and California earlier this year and has plans for another one next year. The centers are focused exclusively on shipping online orders. The home improvement chain estimates that the new centers will support delivery time of 48 hours to over 90% of the zip codes in the U.S. This year, Home Depot is also piloting buy online and delivery to store for its customers.

Bed Bath and Beyond added another distribution center this year in Georgia for direct to consumer and store replenishment shipments.

Retailer facilities currently under construction include:

  • Regional department store Belk is expanding its distribution and fulfillment center in South Carolina by almost 70% to a total of 860,000 square feet. The expansion is to support robust growth of online sales which grew 43% in the second quarter of this year.
  • Nordstrom is building a 672,000 square-foot fulfillment center in Pennsylvania that will begin operation next summer. The primary purpose of the facility is to support Nordstrom’s fast-growing e-commerce business.
  • Macy’s has a 1.3 million-square-foot fulfillment center under construction in Oklahoma. Operations will begin in the summer of 2015 and support direct-to-consumer shipments for Macy’s. Bloomingdale’s, operated by Macy’s, has a fulfillment center in Connecticut. Both stores ship also product to consumers from their stores.
  • Wal-Mart has begun construction on a 1.2 million-square-foot fulfillment center in Indiana. The center will be dedicated completely to shipping online orders and contributes to Wal-Mart’s strategy of shipping from stores or fulfillment centers based on which is better for cost and speed of delivery. Wal-Mart’s 4,200 U.S. stores are within five miles of two thirds of the population, but the stores alone are not sufficient to compete in today’s ecommerce arena.
  • Kroger has begun construction on a new 2 million-square-foot distribution center in Georgia. Slated for completion in September of next year, the new facility will bring Kroger’s total to 36. Kroger operates in 34 states and their omnichannel strategy so far has been to facilitate ecommerce shoppers with online ordering and in-store pick up. The central location and large size of the facility may hint at Kroger expanding to direct shipments to consumers in the future.

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