OPERATIONS

Ikea strengthens distribution network

BY Marianne Wilson

Home furnishings retailer Ikea is adding to its fulfillment capabilities.

The company announced it has leased additional warehouse space to serve as a customer fulfillment center. The 975,000-sq.-ft. leased facility is part of Matrix Global Logistics Park in Staten Island and will be operational in late 2018.

The new center will complement Ikea’s network of seven regional distribution centers, which are currently supporting its 47 U.S. stores. It will focus on delivering items to customers who order products online or purchase larger items at an IKEA store. The site will be operated by CIVA Logistics, which is currently working with Ikea at customer distribution centers in the United Kingdom.

“As we expand across the country and grow our online presence, we want to ensure we have sufficient warehouse capacity to support the efficient and timely delivery and shipment of products to our customers,” said Lars Petersson, Ikea U.S. president. “Our goal is to increase accessibility to Ikea products, and a new fulfillment center in Staten Island will help us meet the home furnishing needs of our customers in the New York metropolitan area.”

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Walmart closing 63 Sam’s Club locations

BY Marianne Wilson

Walmart is trimming its Sam’s Club portfolio of wholesale club stores.

On the same day that Walmart announced it was boosting its minimum wage, expanding benefits and providing a cash bonus, news came out that the discounter will close 63 Sam’s Club across the United States, with several locations closing their doors as early as Thursday, according to CNBC and other media outlets. About 10 to 12 of the locations slated to be closed will be converted into regional e-commerce fulfillment centers.

Walmart did not say how many workers would lose their jobs as a result of the Sam’s Club closings. But Business Insider put the total at more than 11,000, citing that each Sam’s Club employs roughly 175 people.

Sam’s Club itself tweeted the news about the closings.

“After a thorough review of our existing portfolio, we’ve decided to close a series of clubs and better align our locations with our strategy,” the tweet read.

In a note to staff, Sam’s Club president and CEO John Furner said that a review found stores that were hindering business at other locations, or operating in areas that had not seen the population growth that was expected.

“We’ve decided to right-size our fleet and better align our locations with our strategy,” he wrote.

There are about 650 Sam’s Club locations in the United States and Puerto Rico.

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Walmart to raise starting wage; expand benefits

BY Marianne Wilson

Walmart is raising its starting wage for all hourly associates in the United States, handing out bonuses and expanding maternity and parental leave benefits — including providing financial assistance for adoption.

The nation’s largest private employer will increase the starting wage rate for its more than one million hourly associates in the United States to $11, and provide a one-time cash bonus for eligible associates ranging from $200 to up to $1,000. (Rival Target raised its minimum wage to $11 last fall.) The company said the changes partially motivated by anticipated savings from the new tax plan, which provides deep tax cuts to corporations.

The pay increase, which takes effect in the Feb. 17, 2018, pay cycle, is in addition to wage increases Walmart has already planned for many U.S. markets in the coming fiscal year.

The cash bonus will be provided to all eligible full and part-time hourly associates. The amount will be based on length of service. Associates with at least 20 years will qualify for $1,000.

This increase in wages will be approximately $300 million incremental to what was already included in next fiscal year’s plan. The one-time bonus represents an additional payment to associates of approximately $400 million in the current fiscal year, which ends Jan. 31, 2018. Walmart said a “discrete” one-time charge will be taken in the fourth quarter of the current year to account for the bonus.

Walmart is also expanding its parental and maternity leave policy, providing full-time hourly associates in the U.S. with 10 weeks of paid maternity leave and six weeks of paid parental leave. Salaried associates will also receive six weeks of paid parental leave.

The retailer will also provide financial assistance to associates adopting a child. The adoption benefit, available to both full-time hourly and salaried associates, will total $5,000 per child and may be used for expenses such as adoption agency fees, translation fees and legal or court costs.

“Today, we are building on investments we’ve been making in associates, in their wages and skills development,” said Doug McMillon, Walmart president and CEO. “We are early in the stages of assessing the opportunities tax reform creates for us to invest in our customers and associates and to further strengthen our business, all of which should benefit our shareholders. However, some guiding themes are clear and consistent with how we’ve been investing — lower prices for customers, better wages and training for associates and investments in the future of our company, including in technology. Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.”

Walmart said it is early in the process of assessing potential additional investments.

“That assessment will be done not only through the lens of associates, customers and shareholders, but also within Walmart’s financial framework of strong, efficient growth, consistent operating discipline and strategic capital allocation,” the company stated.

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