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Costco acquires last-mile specialist Innovel for $1 billion

CEO Craig Jelinek says ex-Sears/Kmart unit will accelerate e-commerce growth

Russell Redman

March 17, 2020

2 Min Read
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In North America, Costco operates 786 warehouse clubs — including 547 in the U.S. and Puerto Rico, 100 in Canada and 39 in Mexico — as well as e-commerce sites in the U.S., Canada and Mexico.Costco

Boosting its last-mile capabilities, Costco Wholesale Corp. has bought third-party delivery and logistics provider Innovel Solutions for $1 billion in cash.

In announcing the deal on Tuesday, Costco said the transaction has been completed. Hoffman Estates, Ill.-based Innovel was a subsidiary of Transform Holdco LLC, the operator of Sears and Kmart stores.

Innovel has for decades provided Sears with “final mile” delivery of big and bulky products, along with installation and “white glove” support services, across the United States and Puerto Rico. More recently, Innovel has begun serving other customers, including Costco since 2015.

Products delivered and serviced by Innovel include major appliances, furniture, mattresses, televisions, grills, patio, fitness equipment and wine cellars.

“We have had a great relationship with Innovel and share a philosophy of taking care of our members” Costco CEO Craig Jelinek said in a statement. “We believe the acquisition will allow us to grow our e-commerce sales of big and bulky items at a faster rate.”

Innovel provides warehousing, transportation, installation and home delivery services to retail, manufacturing and commercial clients. Costco noted that Innovel’s network covers nearly 90% of the U.S. and Puerto Rico, and the company regularly ranks in the top quartile of customer satisfaction scores.

Related:Publix to build distribution center in Greensboro, N.C.

On its website, Innovel said it can reach 100% of continental U.S. ZIP codes, plus Anchorage, Alaska, and Oahu, Hawaii. The company said it offers a 24- to 48-hour delivery capability for 85% of households and 93% of orders and makes more than 4 million deliveries per year, with 1,100 trucks on the road daily.

With more than 1,500 employees, Innovel operates 11 distribution/fulfillment centers and over 100 final-mile cross-dock centers, with 15 million-plus square feet of warehouse space. The company also operates dedicated call centers.

Costco’s acquisition of Innovel comes as other large retailers — such as Walmart, Amazon, Target, The Kroger Cos., Albertsons Cos., Ahold Delhaize USA, H-E-B, Publix Super Markets and Dollar General —bolster their distribution, logistics and delivery capabilities to meet demand for fast-growing product categories and adapt to an emerging omnichannel business model. Efforts include the construction of new distribution centers, automated facilities to fulfill online orders and dedicated space in stores for e-commerce orders.

Issaquah, Wash.-based Costco said that, under its ownership, Innovel will continue to serve Sears and other current third-party customers. In North America, Costco operates 786 warehouse clubs — including 547 in the U.S. and Puerto Rico, 100 in Canada and 39 in Mexico — as well as e-commerce sites in the U.S., Canada and Mexico.

Related:Ahold Delhaize USA plans major supply-chain expansion

About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

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