Flow-through DC and sophisticated software help set the stage for this retailer's success in reaching small, out-of-the-way markets.
The first rule of retailing has always been, Go where your customers are. For most department store chains, that's meant densely populated urban areas, which goes a long way toward explaining the distinctive atmosphere of, say, midtown Manhattan or the Chicago Loop.
But Stage Stores isn't your average department store chain. This retailer has set its sights on a different, niche market: America's heartland. When choosing locations for its small department stores, Stage Stores deliberately targets areas with less than 50,000 people that are at least 30 minutes from the nearest shopping mall.
Stage Stores operates 656 stores under the Palais Royal, Bealls, Peebles, and Stage nameplates. While the bulk of their sales come from brand name apparel, the stores also offer footwear, jewelry, cosmetics, and gift items. The decision to target customers in out-of-the way places has presented both opportunities and challenges. The distance from urban centers helps insulate the stores from direct competition with the big-league department stores. But it also presents some mighty distribution obstacles. Given the perishable nature of fashion, an apparel retailer's success depends on its ability to whisk hot-selling items out to stores - whether they're in New York City or Chickasha, Okla. - before the trend cools. That's challenge enough for big chains whose stores are located mainly along major transportation arteries. It's all the more difficult for a player like Stage Stores, which serves 600-plus retail locations spread all across rural America—often in hard-to-reach places—from only two distribution centers.
"It is a different animal that requires a different approach to the supply chain," says Gough Grubbs, senior vice president of distribution and logistics. Grubbs came to Stage Stores from Foley's, the large Houston-based department store chain that is now part of Federated Stores. "At Foley's, we had 53 stores in five states. With Stage Stores, we have 656 stores across 34 states. Each Foley's store would receive a 53-foot trailer every day. Here, each store gets about 40 cartons, some of the smaller stores only six."
A shot across the dock
In order to keep products moving swiftly through its supply chain, Stage Stores has designed its two DCs—one in Jacksonville, Texas; the other in South Hill, Va.—to cross-dock as many items as possible. "We have flowthrough facilities and we do not back stock much," says Grubbs. "We currently receive 8 million cartons a year and ship out about 5 million cartons and large totes to the stores."
The secret to maintaining that speed lies in the preparation. Stage Stores has instituted a vendor compliance program under which it requires suppliers to perform a number of value-added services before the merchandise arrives at the DCs.
Additionally the retailer requires its vendors to notify it of upcoming deliveries. Today, 96 percent of suppliers send advance ship notices (ASNs) to alert the DCs that shipments are on their way. The ASNs provide details on which SKUs are due to arrive at a particular time, which allows products to be pre-allocated to stores before they ever hit the DCs' receiving docks.
Software for soft goods
Software plays a key role in Stage Stores' distribution success. The company relies on Shippers Commonwealth, a Web-based application service provider (ASP) for optimizing its inbound logistics. The software examines inbound loads and determines what types of transport are needed from its vendors. That allows Stage Stores to better manage flow into the facility and cut transportation costs.
Shippers Commonwealth also links with the Retek warehouse management systems (Retek is now a part of Oracle) that direct operations in the two DCs. This helps the facilities to prepare to receive goods, allocate orders, and determine labor needs.
The planning Stages
Stage Stores' business has been expanding at double-digit rates. Last year, the company opened a hundred new stores, which represents about 20-percent growth. Stage Stores intends to open about 45 stores this year and then another 70 stores per year through 2012.
If you’d like to speak directly with the logistics experts at Stage Stores to learn more about their transportation automation program please call Lori Kesten at 843-805-6607 ext 203 or send a request with contact information to info@shipcomm.com
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