What does last month’s $1B logistics deal tell us?

Billed as an acquisition to “further last mile capacity,” Washington based retailer Costco last month announced the completion of its $1B acquisition of Innovel Solutions, a provider of end-to-end logistics solutions.  

Based in Hoffman Estates IL, Innovel was previously owned by Transform Holdco, LLC--the current parent of Sears and Kmart. Innovel operates 15 million square feet of warehouse space that includes 11 DCs and over 100 cross-dock facilities across the US. Customers include the US military (Air Force and Navy Exchanges), as well as Sears, Kmart, and Lands' End. 

As a 3PL that promotes the slogan “any size, any shape, anywhere,” Innovel has strong capabilities in the “big and bulky” space. Its service offerings go well beyond “residential delivery” and include, for appliances, the bringing in of contracted electricians and plumbers as required.

What does this deal tell us? 

• Vertical integration continues its come back: Costco, having previously brought poultry production in house, now makes a further step in that direction.
• Timing is everything: While uncertainty exists relative to “big ticket” purchases, the current Coronavirus pandemic is creating a tailwind like no other for home delivery providers.
• The foray by top retailers into the logistics space continues: What may have been considered an unlikely alliance at one time given strong trends in outsourcing now becomes much less of a surprise.
• Liquidity is key at this time: The ability to make smart moves when opportunities present is also very much a part of the back-story of this $1B cash deal.

As always it's interesting to observe changing dynamics in the logistics field.