Dive Brief:
- Duluth Trading Company's planned Southeast fulfillment center will handle more than half of its direct-to-consumer orders during the peak holiday season, President and CEO Sam Sato said in a Q1 earnings call on June 1.
- The Adairsville, Georgia, facility is slated to go live in Q3 as the workwear retailer's first automated fulfillment center. It will be able to provide direct distribution for online orders as well as fulfill store inventory needs.
- The fulfillment center is designed to boost order accuracy and speed, helping Duluth Trading meet e-commerce customer expectations. "We’re excited to see this project go live in the coming months as it represents a truly transformational advancement in our supply chain capabilities," Senior Vice President and CFO Dave Loretta said.
Duluth Trading adds Southeast fulfillment center
Dive Insight:
Shifting direct sales needs to the fully automated facility will allow Duluth Trading to reduce labor-driven costs at other locations, Sato said. It will take a sizable investment to get there — about $42.1 million of Duluth's $55 million in capital expenditures this fiscal year will be spent on "continued logistics optimization from introducing the new automated fulfillment center," according to its 2022 annual report.
"With roughly 500,000 square feet, this facility will be the largest and most efficient of our fulfillment center sites with the investment in automation and robotics representing our single largest investment to date," Sato said.
Duluth Trading currently operates fulfillment centers in Wisconsin, Iowa and Utah. The Adairsville facility will be able to process and ship 160,000 units daily while providing a cost-per-unit output of roughly half the rate of its current centers, executives said in March.
"We expect that meaningful cost savings will be realized once the new automated facility is up and running from lower cost per unit processed, lower outbound freight expenses from more efficient packaging and lower parcel weights," Loretta said then. "And we'll be reaching a greater portion of our direct customer base in three days or less, enhancing the service and speed of delivery."
While the facility will be relied on for fulfillment of direct orders, it could also usher in a new era for Duluth Trading through its ability to serve wholesale accounts. The company remains in "a test-and-learn phase" with wholesale, being largely limited to its Tractor Supply Company partnership, Sato said on last week's call.
"The purpose of some of these investments we are making in [the] back of the house is really to allow us one day to enable that opportunity," the CEO said.
Other retailers are investing in automated facilities in a bid for more efficient operations and improved throughput. Chewy is shifting volume from older fulfillment centers to automated locations. Boot Barn's new Missouri distribution center utilizing automation is providing relief for the company's California facility.
