Walmart is establishing five automated distribution centers in an effort to maintain its grocery supremacy.

• Walmart is opening five automated distribution centers for fresh food across the country.
• The retailer aims to enhance its supply chain and increase its capacity to meet customers' online demands through the modernization of its facilities.
• CEO Doug McMillon stated that the company anticipates growing profits at a faster rate than sales in the upcoming years due to automation.

The retailer announced on Wednesday that it plans to launch five automated distribution centers for fresh food nationwide, in pursuit of efficiency and the expansion of its online grocery business.

The discounter's new facilities comprise approximately 700,000 square feet, with chilled and frozen areas featuring automation for storing and retrieving perishable items, such as strawberries and frozen chicken nuggets, which are then sold in stores or added to customers' e-commerce orders.

In order to remain competitive among customers who prefer to pick up orders in the parking lot or have groceries delivered to their doors, Walmart is modernizing its supply chain. This strategy contributed to the company's 22% e-commerce growth in the U.S. during its most recent quarter.

Walmart has been automating supply chain facilities nationwide, including distribution centers and fulfillment centers, to increase efficiency and profitability.

Walmart's supply chain is more efficient due to automated facilities, which provide a clearer inventory picture and enable faster delivery of groceries to stores, as stated by Dave Guggina, executive vice president of Walmart's supply chain, in an interview with CNBC.

"He stated that they have real-time knowledge of their possessions, including the quantity and location, and their proficiency in this area has greatly improved compared to manual processes or legacy software."

By better predicting demand, Walmart can reduce the amount of "safety stock" it keeps in warehouses and back rooms, allowing it to operate more cost-effectively, according to the company's CEO.

Guggina stated that high-tech facilities enable higher density by having twice the storage capacity and processing more than twice the volume of a traditional site.

The increase in capital expenditures at Walmart is due to the company's investment in automation and store remodels. The company has stated that its capital expenditures for the year will be between 3% and 3.5% of net sales, which amounts to approximately $22 billion based on the midpoint of its guidance. This spending is higher than the $12 billion that Walmart has traditionally spent on capital expenditures annually in recent years.

By early 2026, Walmart expects two-thirds of its stores to be serviced by automation and approximately 55% of fulfillment center volume to move through automated facilities. As a result, unit cost averages could potentially improve by about 20%.

What an automated facility looks like

The automated storage and retrieval system within the facilities can swiftly retrieve the items needed to restock store shelves and transport them to a designated area for assembly into a dense pallet ready for delivery to stores. Rather than relying on a human to manually stack these items into a cube like a real-life Jenga puzzle, a robotic system helps push and stack them, carefully placing fragile items like eggs and peaches on top.

Guggina stated that automation can create customized pallets for a store that only contain the specific items required to fulfill online grocery orders. These refrigerated or frozen products can be stored in the back of the store and used exclusively to fulfill those orders.

Guggina refused to reveal the cost of constructing each facility and how it compares with conventional distribution centers for perishable goods.

The second automated distribution center for fresh food at Walmart has recently opened in Lancaster, Texas, near Dallas. The company plans to open the remaining three centers in Wellford, South Carolina; Belvidere, Illinois; and Pilesgrove, New Jersey.

In addition to new builds, Walmart is upgrading four of its traditional distribution centers for fresh food with automation. The company will add approximately 500,000 square feet to each of the facilities in Mankato, Minnesota; Mebane, North Carolina; Garrett, Indiana; and Shelbyville, Tennessee. Additionally, Walmart is retrofitting a legacy facility in Winter Haven, Florida.

Guggina stated that Walmart, the largest private employer in the US with approximately 1.6 million workers, anticipates having the same or more employees in the future despite automation potentially reducing jobs at some facilities.

He stated that Walmart anticipates enhancing productivity without increasing hiring at the same rate as before. The job requirements will also shift, he added. For instance, the company may require fewer workers on the warehouse floor and more drivers for its truck fleet.

At the new distribution centers for groceries, workers will act as supervisors instead of "industrial athletes" lifting hundreds of cases per hour and walking many miles each day.