Kendra Scott is turning its 108 stores into fulfillment centers

Companies big and small are figuring out how to fulfill e-commerce orders by relying on still-closed retail stores.

For nearly six weeks, many brick-and-mortar stores have remained closed, with their inventory sitting untouched and unsold. At the same time, warehouses and fulfillment centers are practicing social distancing and cutting back to skeleton crews, even as e-commerce orders continue to come in. For those that are seeing a boost in online sales, like jewelry company Kendra Scott, finding new ways to deliver goods to customers who can’t go shop in stores has been crucial.

The brand closed all of its 108 retail locations on March 16, which led to a strain on its Austin-based fulfillment center, with social distancing orders mandating that employees stay six feet apart. Beginning in mid-March, the fulfillment team transitioned to having no more than 30 people in the building, and no more than 10 people per physical work area.

At that point, the Kendra Scott team started rerouting orders and inventory to a third-party distribution center (3PL) in order to keep up with customer orders. The company declined to share specifics on current order volume. The company also worked with supply chain solutions company Manhattan Associates to turn those 108 retail locations into mini fulfillment centers.

“We had plans to become truly omnichannel and offer shipping from stores, but that was almost a year out. We have had to accelerate that over the last couple of weeks. The landscape has changed for retail forever, and the companies that will be successful are the ones that put customers’ needs first,” said Tom Nolan, president at Kendra Scott.

As of 2018, Kendra Scott was valued at $1 billion and relied heavily on retail locations not only for hosting events (which have since shifted to a virtual model), but also for driving more than half of the company’s sales volume. In 2019, the company said 75% of sales came from wholesale and 25% came from direct-to-consumer sales.

About nine months ago, the brand started working with Manhattan Associates to begin making some adjustments, which included adding a 3PL provider to take some of the pressure off of Kendra Scott’s Austin distribution center. This, Nolan said, helped Kendra Scott launch a successful ship-from-store plan in just nine days. Typically, a process like this can take three to six months, said Kevin Bass, senior director of professional services at Manhattan Associates.

To make this all work, Kendra Scott collected up-to-date store inventory, on a store-by-store basis, by having sales associates and store managers double-check that the system had an accurate account of current stock. The company also did a small, internal pilot program over the course of about a week to make sure inventory was accurate. Once the technology was in place, sales associates were brought up to speed on how to use the system, which is able to route orders to specific stores and notify sales associates when to fill an order.

“Prior to this, none of our inventory in the stores, 3PL or distribution center were talking to each other. We have had to change our entire business. We’ve done over 600 virtual events, and leading into Mother’s Day we are launching curbside pick-up, which will be paramount to our success,” said Nolan.

On Friday, Kendra Scott will extend its ship-from-store feature to include curbside pick-up in 21 of its 23 Texas stores. The state of Texas gave the green light last week for retailers to offer pick-up services beginning April 24.

Other fashion brands are also leaning on their store inventory: Customizable accessories brand Stoney Clover Lane turned its standalone retail store in Palm Beach into a mini fulfillment center in mid-March. One or two employees from the fulfillment team have been going into the store every day to fill any orders that can be filled based on inventory in that sole location, with the New York City fulfillment center closed.

“Leveraging stores as fulfillment centers is not a new concept, however it’s still a major challenge for retailers. Traditional point-of-sale systems are clunky and difficult to use, and historically, they haven’t been connected to order management systems. This makes it extremely time consuming for stores to be leveraged for fulfillment. Legacy systems simply were not designed for omnichannel,” said Casey Antonelli, senior director of corporate communications at NewStore.

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