Today’s Pickup: Some Sam’s Club stores to become e-commerce fulfillment centers

Up to 12 of the 63 Sam's Clubs that are closing will be converted to ecommerce fulfillment centers, Walmart said. (Photo: Wikimedia Commons/Caldorwards4)

Up to 12 of the 63 Sam's Clubs that are closing will be converted to ecommerce fulfillment centers, Walmart said. (Photo: Wikimedia Commons/Caldorwards4)

Good day,

Lost in the flurry of news yesterday from Walmart was a little nugget of information that will have profound impact on freight movements both within the Walmart supply chain and for carriers who transport goods to Walmart.

As the company was praised in the morning for announcing bonuses for employees and a boost in its minimum wage to $11 an hour, it slipped in the news that it was closing 63 Sam’s Club retail locations across the country.  The closures will leave 597 Sam’s Clubs in the country. 

“Transforming our business means managing our real estate portfolio and Walmart needs a strong fleet of Sam’s Clubs that are fit for the future,” said John Furner, president and CEO of Sam’s Club. “We know this is difficult news for our associates and we are working to place as many of them as possible at nearby locations. Our focus today has been on those associates and their communities, and communicating with them.”

With 63 clubs closing, including 4 in New York, a shift in freight will take place. The good news? Walmart will convert “up to 12 of the impacted clubs to e-commerce fulfillment centers in a move that will speed delivery of online orders.”

The first conversion will take place in Memphis, TN.

In an email to employees on the closure, obtained by Business Insider, Furner said the company conducted a “thorough review” of locations and the clubs closing did not match with demographics of the region, or were too closely located to other clubs.

“We've decided to right-size our fleet and better align our locations with our strategy. We will be closing some clubs, and we notified them today. We'll convert some of them into eCommerce fulfillment centers — to better serve the growing number of members shopping with us online and continue scaling the SamsClub.com business,” he wrote.

The email hinted at some of the plans Walmart has following the closure, including more investment in ecommerce, store remodels and technology. “We'll also be able to lean into the areas members care about most, including fresh food, Member’s Mark, and exciting merchandise. By narrowing our focus and simplifying what we do, we’ll be able to provide better items, a better experience, and a more valuable membership.”

Did you know?

The closing of 63 Sam’s Club stores still leaves Walmart with 597 locations in the country along with nearly 5,000 Walmart stores.

Quotable:

“It's easy to say, ‘the batteries are too heavy!’ or ‘the batteries are too costly!’ and declare the incumbents victorious — but such back-of-the-envelope rebuttals aren't good enough in this case.”

- Alexander Potter, Piper Jaffray & Co. analyst on the Tesla Semi

In other news:

Jobless claims rise for 4th straight week

The U.S. reported that more Americans filed for unemployment benefits in the first week of January for the fourth straight week, although the number still remains low overall. (Wall Street Journal)

Virginia port sees 7% increase in cargo

The Port of Virginia said it saw a 7% increase in container volume in 2017, moving more than 2.84 million 20-foot box unit equivalents. (Virginian-Pilot)

Analyst makes case for Tesla Semi

Piper Jaffray & Co. analyst Alexander Potter says the trucking industry has been too quick to dismiss the Tesla Semi truck and that it does make sense. (Trucks.com)

More NAFTA talks planned

Even as hopes of a NAFTA deal have faded recently, two more rounds of talks have been scheduled to try and salvage an agreement. (Supply Chain Brain)

Freight market forecast to remain strong

FTR Transportation Intelligence expects spot prices to cool slightly but remain strong in 2018, along with the freight market in general. (Fleet Owner)

Final Thoughts

The closing of 63 Sam’s Club locations is bad news for employees, but potentially good news for freight movement, as Walmart said 12 of the locations will be converted to ecommerce fulfillment centers, increasing freight movement in these regions, and boosting local delivery jobs. It has not identified the locations yet.  

Hammer down everyone!

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