Walmart: 65% of stores will be automation serviced by 2026

The retailer is making a push to connect its supply chain and increase use of robotics and data.

box on a conveyor belt.
Inside an automated fulfillment center. (Photo via Walmart)

As Walmart’s stores increasingly become hubs for both in-person shopping and ecommerce, Walmart is set to bring more automation to its supply chain to move goods.

The news: At its Investment Community Day, Walmart executives outlined plans to connect the retailer’s supply chain and add more automation, all while using data across operations. This included bold goals to serve stores with automation, and reduce costs.

What are the goals? Walmart laid out of the following goals to be achieved by the end of fiscal year 2026:

  • 65% of Walmart stores will be serviced by automation.
  • 55% of fulfillment center volume will move through automated facilities.
  • Unit cost averages could improve by 20% as a result of this, Walmart said.

Key quote from Walmart CEO Doug McMillon: “We are in a unique position to serve our customers and members however they want to shop, which will fuel continued growth. As we grow, we will improve our operating margin through productivity advancements and our category and business mix, and drive returns through operating margin expansion and capital prioritization.”

According to remarks from executives, this will be driven by three key pieces:

Connecting the supply chain: Over the years, Walmart built several different supply chains: An ambient supply chain for general merchandise that serves stores, a perishable supply chain for grocery and supercenters, an ecommerce fulfillment network and delivery from stores. Now, Walmart has re-engineered the supply chain network to connect these pieces by combining digital catalogs, use data and add automation.

Add technology to centers: The company is building data, software and robotics capabilities in a variety of different facilities, including ambient fulfillment centers, ecommerce fulfillment centers, perishable distribution centers, and newer market fulfillment centers that are attached to stores. “In many cases, we don’t need to build a new facility,” said Walmart US President John Furner, according to prepared remarks. “We’re able to use the existing assets we have more flexibly and efficiently for new ways of working.” The investment event included a visit to a Florida distribution center that demonstrated how increased item storage and technology allow for a “more consistent, predictable and higher quality delivery service to stores and customers and react more quickly to customer demand,” according to a news release.

Automating stores: Walmart’s 4,700 stores remain central nodes for its operations, both for in-person shopping and ecommerce. The company has inventory within 10 miles of 90% of the U.S. population, which brings distinct advantages for last-mile delivery, both in terms of speed to customers and costs for Walmart. “So we’re picking and fulfilling orders from our stores, batching deliveries to create more density, and delivering to doorsteps, garages, and all the way into the customers’ homes,” Furner said. “We have a strong store pickup business, and we need to become more competitive with to-home delivery, especially for general merchandise. Automation greatly helps. It helps us combine orders and create more density."

How will automation change Walmart?

What will it mean for employees? Walmart said the result increased automation will be roles that “require less physical labor but have a higher rate of pay.” The company said it sees increasing throughput per person as a result of automation. “It all starts with our associates,” McMillon said. “We are a people-led, tech-powered omnichannel retailer.” Yet there were signs this week that there will be tradeoffs in this process. Just as the meeting was getting underway, Walmart said it would lay off 2,000 workers from five fulfillment centers. According to CNN, a spokesperson said it was a move to “better prepare for the future needs of customers.”

The returns: With more automation, Walmart believes it will be able to lower costs, and increase profit. The company said that it is aiming for 4% sales growth over the next five years, which would add more than $130 billion. “On top of that, we think the opportunity for operating income growth over the next 3-5 years could be better than what we've outlined,” CFO John David Rainey said in a statement. Along with operational efficiency, Walmart is honing in on its high-margin digital businesses for growth, including advertising, data, memberships and marketplace. While significant investment is required to stand up these capabilities, ultimately Walmart believes that technology will help to boost the bottom line.

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