The halo facility for Mount Horeb, Wis.-based Duluth Holdings Inc.’s logistics network will be the roughly 500,000-square-foot property in Adairsville, about 60 miles north of Atlanta, where it will stand as the workwear retailer’s first automated center. The automated storage and retrieval systems (ASRS) inside will be powered by Toyota Advanced Logistics’ supply chain business Bastian Solutions.
There, robots will help in squeezing out efficiencies when it comes to storage and supporting human labor.
“In a nutshell our other facilities are based on a more traditional model of linear conveyage, large batches that are then picked and then packed,” explained Duluth vice president of supply chain and logistics Kevin Helmeid. “It’s something that, when we talk about that step change, [of going] from the traditional logistics distribution model to the new faster, automated fulfillment center model.”
The $53 million Georgia location joins an existing network of smaller facilities in the 200,000-square-foot range, located in Belleville, Wis. and Dubuque, Iowa. The most recent opening was Salt Lake City to service the West Coast. Georgia is seen as addressing a southeast gap for the company, handling both e-commerce and retail, taking in inventory from other facilities, domestic vendors or shipments from the Port of Savannah.
Currently, the majority of Duluth’s imports are coming in through the Port of Long Beach. However, Helmeid said as capacity increases, the company will become more flexible to ship to whatever port makes the most sense.
“Like all retailers, we were certainly impacted similar to other businesses,” Helmeid said of the supply chain issues hampering retail. “But we feel really good about our position with our inventory and have been able to mitigate those delays.”
President and ceo Sam Sato said about as much earlier this month during the company’s fiscal second quarter call with analysts in noting that the shipping delays of last year and the start of this year “have mostly subsided” and that the company’s “overall inventory position is in good shape.”
“The main thing that we do is focus on being a dynamic and responsive portion of the business,” Helmeid said in describing the flexibility the logistics team has had to exercise in more recent years. “What we talk about in logistics is trading value for the business, and with this automation [in Georgia] it’s not just about being a cost center for the business. It’s about how do we create value….Certainly, the southeast is going to be our flagship automated facility and, really, the goal is to have a lot of key learnings.”
Once those learnings have been established, it’s likely that the automation would be rolled out to Duluth’s other facilities. The move could be key as the retailer continues on with an ambitious growth plan to get to at least $1 billion in sales by 2025.
The plan, which the company introduced about a year ago, is named the Big Dam Blueprint and is focused on a few key areas of growth, including digital, store, proprietary brands and investments in automation for logistics and other parts of the business.
Duluth tapped Sato to lead the company last year to implement the growth plan, with the fiscal year ended Jan. 30 seeing the retailer generate net sales of $698.6 million. That was up 9.4 percent from the year prior. Net income increased from $13.6 million in fiscal year 2020 to $29.7 million.
The company currently counts 65 stores and is in the process of looking at real estate for additional openings next year. The company’s website notched a high single-digit increase in traffic, with 70 percent of that coming from mobile.
In the vein of logistics, outside of the Georgia fulfillment center, Duluth hired senior vice president and chief technology and logistics officer AJ Sutera last month. Sutera most recently served as technology chief at Signa Sports United, but has also spent time in various tech and digital positions at JD Sports Fashion, Hudson Bay Corp. and Saks Fifth Avenue.
The bridge between tech and logistics in Sutera’s position recognizes where Duluth and its customer base is going, and ultimately dictating how its fulfillment, at increased speed, is achieved.
“The customer’s adoption of digital platforms and influencer-based purchase behavior has never been greater and is informing our shift to prioritizing social media and paid digital media to gain greater visibility to our sub brands,” Sato told analysts during the conference call this month. “The best return on advertising spend comes from where we’re able to leverage data models to identify specific customer segments to focus on purchase frequency within priority geographies.”
As the Duluth business continues to grow and evolve in response to digital and social media trends, its logistics and fulfillment infrastructure is doing the same, Helmeid pointed out.
“Part of our journey is bringing our logistics capabilities in house,” he said. “There was a time that we did rely on other partners and, over the last few years, we’ve really focused on upgrading our capabilities not only with automation in the southeast but our skill sets in our team.”
Some of those capabilities were reliant on third-party logistics vendors that assisted with fulfillment during peak seasons, but it made sense to own those functions given the trajectory Duluth is on and where it needs to be in the future, according to Helmeid.
Said the executive: “We’re really looking at a holistic approach at building out our teams, managing our freight and transportation and then, the capacity and fulfillment side, addressing what capacities we need and how do we service our customer and meet their expectations for service and speed.”