Dive Brief:
- A March fire that destroyed a large Walmart fulfillment center in Indiana forced the retailer to reroute orders around the country last quarter, CEO Doug McMillon said during a Q1 earnings call.
- No employees were hurt in the blaze, but the loss of the facility in Plainfield “put a strain on our system,” McMillon told analysts, affecting e-commerce operations early in the quarter by spreading shipments to other warehouses.
- The warehouse will not reopen, and Walmart has offered the 2,089 employees who worked there alternate employment options within the company, the Indianapolis Star reported.
Dive Insight:
All of Walmart’s 210 fulfillment centers across the U.S. are at least 1 million square feet, and the Plainfield facility was “one of our largest,” McMillon said.
Workers evacuated the burning facility within five minutes, Walmart U.S. President and CEO John Furner said during the call, adding the fire was “a tough event for the team to go through.”
The fire tore through the massive facility for multiple days, burning so high the plume of smoke could be seen on satellite imagery.
Because of the facility's large size, rerouting orders added logistics costs, Furner said, although he did not specify how much.
Losing the Plainfield facility complicated Walmart’s efforts to improve its long lead times in general merchandise, Furner said. While the retailer was able to reroute most orders within about 72 hours, the shift affected productivity at each of the centers receiving the extra orders.
“There was some topline impact, as you can imagine, in each of these centers, particularly with our assortment, including our fulfillment services,” Furner said.
Despite the fire and its ripple effects on Walmart’s fulfillment network, the retailer reported a 1% increase in U.S. e-commerce sales in Q1, according to an investor presentation.
“I'm proud of the team for moving so quickly to keep orders flowing to our customers,” McMillon said.
Walmart extended disaster benefits to workers affected by the fire and has resumed operations at an adjacent warehouse that was not damaged, the Associated Press reported.
The Bureau of Alcohol, Tobacco, Firearms and Explosives is investigating the fire’s cause.
