Yesterday, box warehouse and online retailer Costco Wholesale announced the consummation of a $1 billion acquisition of Innovel Solutions, the de-facto logistics and distribution arm of the operator of Sears and Kmart stores in the United States. The acquisition was funded by existing cash balances.
The deal is being billed as the retailer’s largest acquisition and presents some obvious strategic options for the warehouse retailer moving forward.
Founded in 1939, Innovel Solutions describes itself as an end-to-end logistics solutions provider servicing major retailers, manufacturers and the U.S. Military in the logistics and distribution support of military facility retail exchanges. The genesis of Innovel is from originally supporting the logistics needs of Sears branded stores.
Today, the logistics provider employs 1500 people, operates 11 U.S. regional warehouses, while supporting a national final mile delivery network of termed Market Delivery Operations cross dock centers. Included are expanded last mile or white glove customer fulfillment capabilities to deliver, install and perform reverse logistics for household goods as well as other services that are plumbing and electrical related in installing said goods. The provider’s web site indicates capabilities to reach 100 percent of continental U.S. zip code addresses as well as certain areas of Alaska and Hawaii.
In the announcement Costco indicates being a customer of Innovel since 2015, hence had customer knowledge of the provider’s capabilities.
Costco itself operates a reported 786 warehouses across the U.S. and Puerto Rico, along with global distribution capabilities supporting a number of other countries including Canada, Mexico, certain countries in Europe and Asia.
Costco is acquiring the logistics provider from Transform Holdco LLC, a holding company operator of existing Sears and Kmart stores. According to reporting by The Wall Street Journal, the deal was motivated by the need for Transform Holdco to raise cash to repay non-real estate debt.
Supply Chain Matters views this announcement as an obvious strategic move by Costco affording added options in the custom last mile fulfillment and delivery of bulk household and likely small business goods. It will likely afford the ability to expand merchandise selection offerings as well as other custom service that can differentiate this retailer in in-store and online retail services.
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