Walmart’s store fleet is staggeringly huge, and the operation to support it is similarly massive.
The retailer’s 4,600 stores are supported by a network of 42 regional distribution centers — sprawling warehouses of up to 1.5 million square feet that typically employ around 1,000 workers, according to logistics consultancy MWPVL.
Of those 42 DCs, Walmart CFO John David Rainey said the company has 15 that now have “some level of automation,” serving about 1,700 stores.
Speaking at the Evercore ISI Consumer and Retail Conference on Wednesday, Rainey revealed an utterly bonkers statistic when one of these facilities is fully dialed up.
“When we automate one of these DCs, we see roughly twice the throughput with half the head count. And so, the math on this is very, very compelling,” he said.
Twice as much stuff with half as many staff is a fourfold increase in efficiency — compelling math indeed.
And more revenue per employee translates to higher profit margins.
“They’re planning to add $130 billion of sales over the next five years on a flat head count,” Jefferies analyst Corey Tarlowe told Business Insider. “AI and automation are going to be absolutely critical to their evolution.”
As Walmart’s distribution center and fulfillment center capacity increases, it’s starting to exceed the inventory Walmart actually owns, Rainey said.
“It gives us the opportunity to use that space for our third-party providers,” the CFO said. “A very exciting part of what’s changed in our business over the recent quarters is the number of 3P sellers that are availing themselves of Walmart fulfillment services.”
A day earlier, at Oppenheimer’s e-commerce conference, Walmart US CEO John Furner indicated how these lower costs feed into an e-commerce flywheel that is gaining momentum for the company.
“The cost of picking is coming down, the density of last-mile delivery has improved, so therefore, the cost per unit continues to fall,” Furner said. “You put all that together, and we see a much better path than what we saw a few years ago.”
