WAL-MART EXPANSION SPURS NEW GM DCS

MATTHEW W. EVANS

BENTONVILLE, Ark. -- Wal-Mart here expects to have operational an additional 2.4 million-square-feet of new general merchandise distribution space by September of next year in a continuing realignment and expansion initiative, a company spokesman told SN.

The retailer plans to build two new distribution centers, both 1.2 million square feet. Construction of the centers is to begin this summer in Sanger, Texas, about 50 miles north of the Dallas-Fort Worth metro area, and this fall in St. James, Mo., nearly 100 miles southwest of St. Louis, the company announced this month. The cost of each facility exclusively devoted to nonfood is reported to be about $50 million.

"These distribution centers are going to play a critical role in the growth of our business and certainly the way we are able to service our customers," said John Bisio, a Wal-Mart spokesman.

With the end of the discounter's fiscal year (Jan. 31, 2001), Wal-Mart will have added another 165 Supercenters and another 25 to 40 Discount Stores. This will be in addition to the 150 Supercenters and 40 Discount Stores added last fiscal year, said Bisio. The retailer has expanded its Neighborhood Market concept in Oklahoma and it is eyeing expansion in Texas and other areas. "They're (Neighborhood Markets) going to be in each of those states where there is growth," Bisio stated.

The facilities, termed "regional" DCs by the company to denote that they inventory general merchandise, will warehouse the vast majority of the retailer's nonfood items. This includes cosmetics, health and beauty care, over-the-counter medications, lawn and garden, sporting goods, and housewares, among other categories. The design of each building will be virtually identical.

"Replenishment and inventory management are very significant at Wal-Mart," Bisio said. "This will certainly enhance our ability to meet our customers' expectation to find the merchandise they want on our store shelves as we grow, and grow the business and volume at our existing stores.

The new facilities will mean economies in reducing cost with respect to proximity to those shipping areas, Bisio explained. In Texas, he said, "this new DC will be taking over some of the territories that are covered by the Temple, Texas, regional DC. We have some DCs that are serving stores more on the outer [fringes] of their territories. As we fill in those voids, we're realigning. Typically, that's going to be the case."

Each facility will employ about 600 employees to start. That number is expected to increase to 1,000 as store base expansion and realignment to "fill the voids" in distribution networks takes place. Noticeable effects of integrating the two new centers, with a combined 26 miles of conveyor, will not be felt at the retail level, Bisio added.

Initially, 80 of a total of 264 bays in each new DC will service outgoing product, each dock shipping directly to a designated store. That number is expected to increase to around 100 with the volume expansion that will accompany store base expansion. The remaining 164 bays will be used for incoming product.

The new centers will service every Wal-Mart format except for Sam's Club, which is on a separate distribution network. A typical Supercenter carries 100,000 stockkeeping units, according to Bisio. Aside from general merchandise DCs, Wal-Mart operates food distribution centers and a limited number of company-owned apparel warehouses.