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J.C. Penney to Trim ‘Oversized’ Distribution Center Network

As retail chains shutter doors to reflect today’s shopping patterns, they’re also having to adjust their logistics as well.

JC Penney, which closed almost 140 stores across 41 states last year, is now making tough decisions about it’s supply chain. The department store chain has confirmed that it will close a 2 million-square-foot distribution center in Wauwawtosa, Wisconsin this summer. The move will leave 670 warehouse and customer service employees without a job.

The operations formerly taking place in that facility will now be handled in the company’s Lenexa, Kansas and Columbus, Ohio locations.

Penney’s spokesperson Carter English told the Journal Sentinel newspaper that its supply chain network “is oversized relative to its national store footprint.”

Eligible affected employees will get outplacement support and separation benefits, the company said.

In a similar move, The Bon-Ton Stores, which had previously announced it would close 42 locations, last month said the smaller number of stores opened the door for it to close one of its three distribution centers.

Increasingly, store fleets are getting smaller and retailers are finding new ways to tie online purchases to stores. Starting with the 2016 holiday season, retailers like J.C. Penney found that buy online, pick up in store helped drive incremental sales. Since then, department and specialty stores have worked to drive more e-commerce traffic through their stores.

The J.C. Penney chain reported a holiday sales increase of 3.4%, led by double-digit gains in e-commerce. Chairman and CEO Marvin Ellison noted the online performance was driven by e-commerce fulfillment from its brick-and-mortar locations.