Dive Brief:
- Walgreens plans to increase the number of stores serviced by its micro-fulfillment centers, growing the number “closer to 6,000" in the next 12 months, CEO Tim Wentworth said in a Q1 earnings call.
- The company had previously paused the rollout of new centers to optimize productivity and focus on improving operations at existing facilities, then-interim CEO Ginger Graham said in 2023.
- Walgreens has over 4,500 stores being serviced by micro-fulfillment centers today, Wentworth said. In total, the company has 11 of these facilities, according to Walgreens' most recent 10-K filing.
Dive Insight:
Walgreens took a step back in 2023 to review and analyze how its micro-fulfillment centers benefited the company’s operations. Leaders found there was room for improvement.
“As you may recall a year ago, we had slowed this way down in part because the experience at the last mile was not what we wanted it to be. It also was not as cost effective as we had hoped,” Wentworth said in the earnings call.
Walgreens announced plans to speed up prescription delivery via the automated centers back in 2021. The company aimed to have a total of 11 micro-fulfillment centers by 2022.
More recently, the company has made “massive improvements” in the operations and cost to operate the centers, Wentworth said.
Wentworth praised Jon Joplin, chief technology and operations officer in automated fulfillment, for takings the centers to the “next level in terms of operating efficiency, but also longer term, in terms of the experience for our stores as receivers for this.”
Other companies adopting automated fulfillment include Giant Eagle, Chewy, and Best Buy. Last year, grocer Giant Eagle was preparing to open its first automated micro-fulfillment center in Pittsburgh, which will assist in fulfilling curbside pickup orders.
