Sainsbury’s, the U.K. supermarket chain giant, said Wednesday that it will move to three nationwide logistics partnerships by the end of 2024 as a way to simplify its operations by reducing vendor layers and moving its logistics workers off the payroll.
The three businesses are transportation, food and general merchandise. The company will migrate from a network of multiple contracts spread out nationwide to those that will function at a national level.
The changes mean that Sainsbury’s can manage its logistics at the national level for the first time in its history.
On the food side of the business, Sainsbury’s will partner with contract logistics provider GXO Logistics Inc. (NYSE: GXO) to manage fresh and frozen shipments at several warehouse sites. GXO will operate six additional warehouses for Sainsbury’s and replace three fresh and frozen food vendors that currently handle the work. DHL will take on additional warehousing operations for the general merchandise category.
GXO already operates nine reverse logistics sites as well as a food distribution center for Sainsbury’s. Most of Sainsbury’s own food warehouse operations will remain in-house.
About 3,000 Sainsbury’s employees will transfer to either GXO, DHL or Wincanton, Sainsbury’s transportation provider, over the next two years. Another 4,000 who work for those companies will transfer between them, Sainsbury’s said.
Sainsbury’s will spend about $280 million over the next three years to support the improvements, which include expanding capacity in key categories and improving fulfillment propositions.
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