Saks turns to GXO fulfillment center to meet e-commerce demand

Dive Brief:

Anticipating surging demand for luxury fashion as the holidays approach, Saks has begun shipping directly to customers nationwide through a new GXO Logistics fulfillment center in Middletown, Pennsylvania, the companies announced Tuesday.
Saks, which launched as a standalone e-commerce company earlier this year, will use GXO’s collaborative robots and shared-space distribution network to reduce its reliance on air transportation, the companies said.
The 400,000-square-foot facility near Harrisburg is the second one GXO has announced this month, following the news of an even larger, high-tech distribution center for Abercrombie & Fitch in Arizona.

Dive Insight:

Saks' move fits three of the top objectives for many companies' global supply chains, according to Rich Thompson, international director of supply chain and logistics solutions at JLL.

"In no particular order, they are (1) get closer to your customers to reduce transit times, (2) reduce freight costs which are typically the largest operating expense, and (3) reduce risk and complexity," Thompson said in an email.

Like Abercrombie and other direct-to-consumer retailers, Saks is outsourcing logistics to help the company meet surging e-commerce demand and avoid supply chain congestion.

The rise in DTC brands has led to heated competition among third-party logistics companies seeking their business. Many retailers outsource fulfillment operations, especially in their early days, to guarantee speed, quality and flexibility, according to a 2020 McKinsey report.

Walmart, Amazon, UPS and others offer fulfillment services to small- and mid-sized retailers. Geodis entered the crowded field in August, boasting the ability to provide two-day delivery to 91% of the continental U.S. from facilities in Indiana, California and New Jersey.

GXO's DTC service, GXO Direct, has rolled out at 41 of the company's 850 warehouses across the country, the Greenwich, Connecticut-based company said. About 70% of its Pennsylvania facility will be devoted to Saks inventory, GXO said.

The facility will deploy GXO’s "advanced automation, including collaborative robots, to optimize efficiency, improve accuracy and enhance the employee experience," the companies said.

Using automation and robotics makes sense, too, especially given the difficulties in attracting and retaining labor across industries, Thompson said.

"The impact those technologies have on increasing productivity and reducing cost is significant," he said.