Abercrombie & Fitch Co. is expanding its distribution network to the West Coast as e-commerce demand and ongoing supply chain constraints magnify the need for more warehouse space and new points of distribution.
In tandem with GXO Logistics, the denim-centric apparel retailer is opening a new 715,000-square-foot distribution center in Goodyear, Ariz., adding to the two distribution centers in its home base of New Albany, Ohio.
The facility will serve as A&F’s new hub for its West Coast operations and is expected to become fully operational later this year.
The warehouse will be heavily automated, including goods-to-person robotics that help employees increase productivity and improve safety by speeding up the picking process and reducing the amount of walking needed to fulfill orders. Intelligent analytics, including AI and machine learning will also be deployed at the site to efficiently distribute products to customers. The new facility will also be energy-efficient and climate-controlled.
“We’re pleased to open this new distribution center in Goodyear; it provides another opportunity to expand our supply chain capabilities in a prime location for the West Coast market,” said Larry Grischow, senior vice president of supply chain and procurement at Abercrombie & Fitch Co. “We’re looking forward to continuing our partnership with GXO, as the company shares both our dedication to the West Coast market and our commitment to leading-edge logistics innovation.”
A&F doesn’t break out digital sales statistics, but CEO Fran Horowitz said in an earnings call that e-commerce sales “held steady to 2020 levels” and have grown 52 percent over 2019, which is similar to many counterparts in the industry that have seen revenue in the channel hold firm.
And while the retailer operated 733 stores as of August, it shuttered 137 locations in 2020, including eight flagship models. In a virtual consumer conference in June, Scott Lipesky, chief financial officer at Abercrombie & Fitch, hinted that more closures could be on the horizon. In total, the retailer has approximately 250 leases expiring at the end of 2021, representing nearly one-third of its store fleet, he said.
While the retailer saved $115 million in store occupancy costs last year, Lipesky noted that A&F plans to reinvest those savings in fulfillment, further illustrating why the company is opening a new regional distribution center.
Under Horowitz, the company has trimmed product development and production lead times by implementing a cross-branded supply chain, the CEO told Sourcing Journal in March.
The cross-branded supply chain “allows us to not only leverage total company volume, but to also offer differentiated raw materials and products for our customers across our brands,” she said.
A&F is a current supply chain partner of GXO Logistics, which completed its spin-off from XPO Logistics in August. The logistics company specifies in warehouse management and emerging opportunities such as e-commerce expansion, logistics automation and supply chain outsourcing and last month piloted an apparel-specific picking robot in a Netherlands warehouse.
The “Pick-it-Easy” robot, developed by Knapp, is backed by an AI-based vision system that recognizes each product and identifies the optimal gripping point and gripping speed, while the arm places items into a pocket conveyor for sorting, grouping and routing to packing stations. These robots align well with apparel warehousing tasks, which often need to differentiate product sizes, shapes, textures, weights and packaging.
While neither A&F nor GXO shared the specifics of the robotics to be implemented into the Arizona warehouse, it is possible that the technologies would be similar to the Netherlands pilot.
The distribution center will create more than 300 jobs in the Phoenix metropolitan area and add to GXO’s growing presence in the market. GXO currently operates seven warehouses in the region, including a second facility in Goodyear.
The new multi-year agreement brings GXO’s total square footage in the area to more than 2 million square feet.
“We’re excited to expand our partnership with Abercrombie & Fitch Co. in Arizona,” said Bill Fraine, chief commercial officer GXO Logistics. “This investment is another sign of the area’s vibrancy and talented employee base. We’re looking forward to exceeding our customer’s expectations and adding to their growth, while leveraging our extensive knowledge in the fashion space.”
Workers at the Goodyear distribution center will receive “market-competitive” compensation, as well a wide range of benefits, including a 401(k) plan, parental leave and flexible shift options.