Grocery giant Walmart (WMT) is ramping up its logistics battle with e-commerce rival Amazon (AMZN) by converting empty retail stores into faster local delivery hubs.
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According to a report in the Financial Times, Walmart is busy converting retail spaces into neighborhood stockrooms aimed at speeding up same-day and 30-minute delivery times across the U.S. They are known as Walmart depots.
It is understood that the retailer has established at least three of these facilities over the past year in Dallas, New Jersey and Arkansas. It is reported that additional sites are under consideration in California, New York, Florida, Nevada, the Pacific Northwest and Virginia.
Potentially part of the estate are abandoned and empty Rite Aid and Walgreens pharmacy stores.
Each depot covers approximately 20,000ft², holds frequently purchased household goods and is managed by a nearby Supercenter. The sites, which are not open to the public, are restricted to gig workers operating through Walmart’s Spark driver app.
The Financial Times uncovered one public filing in New York where it is seeking to occupy an old Rite Aid outlet. In it Walmart described its depots as a “new way to deliver faster to more people.”
Walmart Challenging Amazon
It comes a month after reports that Walmart is testing a system where third-party sellers’ goods for its marketplace are stored in the storage space at the back of its stores alongside its own inventory. It is understood that a pilot program has been launched at several stores in the Dallas area.
The hope is that these moves could help Walmart take out one of Amazon’s key advantages – namely its huge warehouse and logistics network edge.
It is understood that although its 4,600 US stores currently reach 95% of the country within a three-hour delivery window, processing orders inside its large stores is too slow for customers liking.
Walmart’s U.S. e-commerce operation generates $100bn in annual revenue and is growing at more than 20% a year. So, it is important that it gets the delivery operation right.
Is WMT a Good Stock to Buy Now?
On TipRanks, WMT has a Strong Buy consensus based on 28 Buy and 2 Hold ratings. Its highest price target is $150. WMT stock’s consensus price target is $140.08, implying a 6% upside.
