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Here’s What Brick-and Mortars Can Learn From Walmart’s Supply Chain Revamp

In the age of Amazon, all of retail’s rules are being re-written.

It isn’t just the e-tailer’s breadth of selection that has consumers hooked—its fast, free shipping policy has completely revolutionized the way that they shop as well. Buying on the massive online marketplace is more convenient and nearly as expedient as heading to the local big-box store for one’s necessities, and for many consumers, weekly deliveries are a way of life.

That fact has had brick-and-mortars spinning their wheels for ways to remain relevant. For legacy retailers like Walmart, evolution is a necessity.

Integrating omnichannel operations has become Walmart’s singular priority, the company said in July. The first step is a complete revamp of its supply chain to make operations more speedy and efficient.

The company announced last month that it would begin leveraging its enormous fleet of physical stores as mini warehouses to fulfill orders, creating more than 5,000 additional shipping locations closer to consumers.

“Retailers can leverage their brick-and-mortar stores as warehouses to become uber-local and deliver products more quickly to consumers that are nearby, rather than relying on fulfillment centers in scattered locations,” Dan Neiweem, co-founder and principal of digital strategy firm Avionos, told Sourcing Journal. “This enables retailers to cut down on delivery costs and reduce pain points involved with last-mile shipping.”

Neiweem said that creating more locations to support e-commerce orders could help Walmart enhance its flexibility, and combat Amazon’s ubiquitous presence.

Amazon’s increased integration with subsidiary Whole Foods, along with its expanding Amazon Go retail stores, has contributed to the company’s ability to interface with consumers throughout their daily lives. The company is also opening distribution centers across the country at a breakneck pace, attempting to get closer to the consumers it serves.

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Walmart, by contrast, has always benefited from its proximity to consumers, with 5,362 stores across the U.S. Utilizing its sprawling stores for storage and distribution instead of just in-store transactions could give Walmart the edge it needs.

“By leveraging its massive brick-and-mortar stores and revamped distribution centers as mini-warehouses, Walmart is using the facilities it already has to house and manage orders—whether customers are buying online or shopping in store, “Neiweem explained. “With this move, Walmart can cut down on costs by using the products in store for online fulfillment, which in turn cuts down on wasted inventory.”

Neiweem posited that other retailers with a significant brick-and-mortar would likely follow the company’s lead.

“Retailers like Walmart and Target are able to move the fastest in terms of innovation when it comes to using their brick-and-mortar stores as warehouses, given they have the capital to do so,” he said.

Smaller retailers that don’t have the space or the presence of brands like Amazon or Walmart will have the most to learn—and to lose—throughout their attempts to evolve and compete. But Neiweem believes that providing unique in-store experiences, as well as enhancing delivery capabilities, could help.

One way to do that is to outsource, he said. “Moving forward, I see more retailers leveraging third-party services like DoorDash and Uber Eats to deliver their products more quickly to customers.”

Taking advantage of these services, whose teams are already well versed in logistics, could save businesses from having to “build out the infrastructure to compete against larger players,” Neiweem, said. It would also lend a newfound purpose to their physical stores “beyond in-store purchases and browsing.”