Dive Brief:
- Duluth Trading Co. encountered processing delays at its Belleville, Wisconsin, fulfillment center during the fourth quarter, limiting its ability to fulfill holiday orders, President and CEO Sam Sato said on a March 13 earnings call.
- A surge in demand over the Black Friday weekend quickly depleted the workwear retailer’s inventory levels at its automated fulfillment center in Adairsville, Georgia. Duluth Trading was counting on the facility, its most efficient, to handle a larger share of volume during peak season.
- With inventory low, Sato said Duluth Trading had to lean more on stock from its Belleville facility to pick up the slack, but that location has less processing capacity than Adairsville. The Belleville fulfillment center is 220,000 square feet, less than half the size of the Adairsville location, per the company's annual financial report.
Dive Insight:
The processing challenges underscore the emphasis Duluth Trading continues to put on upgrading its fulfillment and logistics capabilities, according to Sato.
Duluth Trading opted to reduce the frequency of its sales promotions to help manage demand and fulfill the order backlog following the Black Friday and Cyber Monday stretch, Sato said. The company's net sales fell 1.8% year over year for Q4, which ended Feb. 2, despite record-breaking order volume for the company during Black Friday week and Cyber Monday.
"We've since implemented enhanced operational protocols and planning processes to ensure that we have optimized unit inventory distribution across our fulfillment network," Sato said.
Despite the inventory issues, the Adairsville fulfillment center remains a key pillar of Duluth Trading's supply chain. The location now processes more than 60% of the retailer's volume at a 66% lower cost per unit versus its legacy facilities, according to Sato.
"This investment has yielded tangible customer benefits through faster click-to-delivery times while significantly expanding our network capacity," Sato said.
Besides Adairsville and Belleville, Duluth Trading also has a fulfillment center in Salt Lake City per its annual financial report. It closed a facility in Dubuque, Iowa, last year.
