Dive Brief:
- Dick's Sporting Goods will launch two new fulfillment centers next year to help boost the retailer's time-to-market for most online goods, CEO Edward Stack said in a recent earnings call.
- A new facility being built out in upstate New York will allow Dick's to reach "all of the northeast within a day," and a West Coast facility (which is still being planned) would help better route some of the volume, he said.
- Currently, all goods are delivered to consumers from a centralized fulfillment center in Louisville, Kentucky, or directly from stores.
Dive Insight:
Retailers continue to look for ways to speed up their supply chain, but are often caught between a rock and hard place as they decide the best way to do so.
Store fulfillment is an increasingly popular option to serve multi-channel shoppers, but creating efficiency within stores requires vast investments, such as store remodels, technology upgrades and employee training. New fulfillment centers are no easier to build out, either.
In Dick's case, the retailer is opting to place its bets on fulfillment centers to better service the online customer.
"We believe that we've got better execution really from our centralized fulfillment center that we do from the stores," Stack said.
However, that does not mean the retailer is not simultaneously investing in its stores.
In the first quarter earnings call, Stack explained the retailer would continue to test ways to improve the online pick up experience and invest in its supply chain's reliability. In one example, Dick's is piloting a Locker system at a few stores, Lauren Hobart, president of Dick's, said in the earnings call.
"Our next part of this innovation cycle will be to actually see how important the Locker is versus getting the inventory into the front of the store," Hobart said. "I do not think you'll see a full rollout by holiday, but we will continue to make improvement ... and we are doing that in many stores."
Even without the two new fulfillment centers, Dick's saw a 3.8% decrease in inventory levels in the first quarter and a 4.6% increase in sales, compared to the previous year. "This reflects better execution and translates to better merchandising margins rates," Stack said.
