The Friday Report Blog: December 2nd, 2022

Macy’s Adds Distribution Centers for the Holiday Season

Macy’s has announced the establishment of mini-distribution centers within 35 of its nationwide network of retail stores. The retailer hopes the addition of these mini-distribution centers will help it handle the expected influx of orders ahead of the holiday season.

Macy’s in-store fulfillment services will utilize nearly 1 million square feet of total floor space to store, pick, pack, and ship products directly to consumers over this holiday season. The services will enable the company to save on shipping costs and get orders to customers faster. Customers will also be able to visit any of the 35 stores for same day pick up.

Although retailers such as The Gap are choosing to hold onto their excess inventory, Macy’s does not want to hold out-of-season products in its warehouses. The company expects to free up much needed inventory storage capacity heading into the spring and summer seasons.

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Target Creates New Store Format for E-Commerce Fulfillment

Target has plans to introduce a new type of store that will be centered around e-commerce order fulfillment operations. The large-format store is a change of direction from the company’s previous developmental focus.

In recent years, Target has focused on building stores between 17,000 and 50,000 square feet to reach urban shoppers. The new large-format stores will be more than 150,000 square feet, over 20,000 square feet larger than its average store. The company hopes that their new large-store format will help support its omnichannel services such as same day order pickup.

The new store format is large enough to provide nearly five times more space for inventory storage and order fulfillment. Target will begin remodeling over 200 stores and constructing 30 new stores at the beginning of 2023. The company plans to have the new store format designs incorporated in all its stores by the end of 2024.

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SMART-TD Rejects Labor Deal, Rail Shutdown Looms

The International Association of Sheet Metal, Air, Rail, and Transportation Workers (SMART-TD) rejected a labor deal from the Biden administration that could shut down the entire freight rail system within two weeks. SMART-TD is the largest rail union in the United States. A strike or lockout could cost the United States economy over $2 billion per day.

SMART-TD is pushing for the inclusion of guaranteed sick leave in labor contracts for over 28,000 workers. The union has a deadline of December 9^th to reach an agreement with the railroad companies. Under the Railway Labor Act, if an agreement can’t be reached Congress could intercede to prevent supply chain disruptions. Doing so would force unions to accept the initial deal from the Biden administration without negotiated benefits.

Railroads have warned that they will decrease their service capacity before the agreement deadline to mitigate freight being abandoned in case of a labor strike.

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