Big Lots shutters forward distribution centers to curb costs, excess capacity


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Dive Brief:

  • Big Lots accelerated the closure of all four of its forward distribution centers as the company looks to reduce costs and remove excess capacity, according to a May 26 earnings call.
  • The retailer ceased all operations last month at FDCs in McDonough, Georgia; Bethel, Pennsylvania; Lacey, Washington; and Merrillville, Indiana, a Big Lots spokesperson told Supply Chain Dive in an email.
  • Big Lots also plans to lease back a number of its properties as the company curbs expenses, including its distribution center in Apple Valley, California, Chief Financial and Administrative Officer Jonathan Ramsden said on the call.

Dive Insight:

Like many retailers, Big Lots accelerated its supply chain investments throughout the pandemic to help meet elevated demand. This included the launch of the company’s FDCs which were intended to move bulky items, like furniture, away from its regional DCs and further simplify the company’s distribution network.

Since then, Big Lots reported higher costs associated with the company’s FDCs, including two of its newest forward distribution centers, according to a Q2 earnings call.

“We opened these four forward distribution centers to support a period of high growth for our business,” Ramsden told Supply Chain Dive in an email. “In the current economic environment we no longer need the additional capacity provided by these four forward distribution centers, so we moved to reduce costs and right-size our distribution facility footprint.”

Big Lots isn’t the only company slowing its distribution spend and optimizing its network as demand normalizes.

Amazon, for instance, has been fueling efforts to pull back on the expansion of its fulfillment network. The e-giant has also been shifting away from a national fulfillment model to a more regionalized network to further cut costs and accelerate delivery speeds.

Furniture company Wayfair also is cutting back on its fulfillment investments, and in February cancelled plans to open a center in Houston.

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