BY Fraser Tennant
In a $1bn deal which significantly bolsters its distribution, logistics and delivery capabilities, US multinational Costco has acquired third-party delivery and logistics provider Innovel Solutions from integrated retailer Transform Holdco (TFCO) LLC, the operator of Sears and Kmart stores.
Under the terms of the acquisition agreement, Costco will provide TFCO warehousing, delivery and installation services to Sears and Kmart members on a long-term commercial arrangement. Costco will also retain over 1500 Innovel employees on a go-forward basis.
A provider of warehousing, transportation, installation and home delivery services to retail, manufacturing and commercial clients, Innovel’s network covers nearly 90 percent of the US and Puerto Rico. The company also regularly ranks in the top quartile of customer satisfaction scores. Costco has been a customer of Innovel since 2015.
As part of its acquisition of Innovel, Costco will enter into a long-term commercial agreement in which it will leverage TFCO’s Service Live platform to source technicians for complex installations across the country.
“We have had a great relationship with Innovel and share a philosophy of taking care of our members,” said Craig Jelinek, chief executive of Costco. “We believe the acquisition will allow us to grow our e-commerce sales of big and bulky items at a faster rate.”
Costco’s acquisition of Innovel comes as other large retailers, such as Walmart, Amazon, Target, The Kroger Cos., Albertsons Cos., Ahold Delhaize USA and Dollar General, boost their distribution, logistics and delivery capabilities to meet demand for fast-growing product categories and adapt to an emerging omnichannel business model. These efforts include the construction of new distribution centres, automated facilities to fulfill online orders and dedicated space in stores for e-commerce orders.
For TFCO, Costco’s acquisition of Innovel allows it to focus on its core assets and capabilities to deliver service excellence for its members and customers. TFCO believes this programme will give it the best chance to grow value and to maintain a meaningful retail presence in the US to support the expansion of its core businesses.