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Walmart’s New Consolidation Center Aids SMB Suppliers

Walmart tapped Lebanon, Pa. for a new logistics center aimed at bolstering its supply chain as eastern and central Pennsylvania industrial market rents continue to climb.

The big-box retailer said this week it will open a more than 400,000-square-foot consolidation center this month, marking the second after its first in the Inland Empire city of Colton, Calif.

Walmart’s consolidation centers play a key role in the movement of product from suppliers to stores. Colton, which opened in 2019, and Lebanon serve as drop-off points for merchandise that then gets sorted into shipping loads bound for one of Walmart’s 42 regional distribution centers. Merchandise, from there, is then moved to stores.

A spokesperson for Walmart told Sourcing Journal the facility is expected to be fully operational by the end of the month.

Walmart senior vice president of supply chain operations at Walmart Mike Gray said in a statement the consolidation center is part of the retailer’s push to ensure inventory availability.

“As part of these investments, the Lebanon facility will provide even more opportunities for small to medium sized suppliers, who do not ship nationwide, the ability to provide product to all 4,700 Walmart stores,” Gray said.

The facility is being touted for its automation technology, which Walmart said will have the ability to triple the amount of volume processed inside the center and is the same tech that’s used in Colton.

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Walmart U.S. senior vice president of innovation and automation David Guggina said in a statement the retailer’s “creating the future of supply chain” with its industrial real estate network.

The souped-up facility follows Walmart’s announcement last month that all of its regional distribution centers will be retrofitted with automation technology from Symbotic, a Wilmington, Mass.-based robotics warehouse company.

Symbotic’s warehousing system uses algorithms and robots to organize the storage of inventory in a task that is typically handled by a human, with the technology increasing efficiencies and also accuracy when that merchandise is eventually loaded onto a truck and bound for a store.

“We are always looking at ways we can best utilize our network by leveraging automation,” the spokesperson said, declining to comment on whether the retailer thinks the two facilities alone can support the network or if more are planned for the future.

Walmart joins a number of other retailers with warehouse and distribution space in Lebanon, including Ross, Aldi, Amazon and The Home Depot.

DHL Supply Chain about a year ago began construction on two facilities in Lebanon, spending roughly $88 million on two buildings to handle manufacturing, warehouse and distribution.

The industrial real estate market for Eastern and Central Pennsylvania has continued to see rents soar, with brokerage firm JLL noting rents for Class A space hitting a new record in the second quarter.

“Despite several previous quarters of record activity in the Eastern [and] Central Pa. industrial market, new benchmarks were set in Q2 2022,” the firm said in its quarterly update on the market.

The activity was driven by lease deals executed for properties totaling more than 500,000 square feet by companies in the third-party logistics, logistics and distribution, and e-commerce segments, JLL said. The three sectors accounted for 46.3 percent of the quarter’s leasing activity, according to the market report.

Rents for Class A industrial space—those properties that are new and at the top of the market—jumped more than 24 percent in the quarter, compared to the year-ago period, to $7.93 per square foot, JLL said.

“Despite rising interest rates and recent economic uncertainty, developers proceeded on new projects, breaking ground on 4.3 million square feet of speculative construction in Q2,” JLL said. “This further indicates that developers’ and investors’ outlook on demand remains bullish for the remainder of the year.”