Kering overhauls logistics

By

Dominique Muret

Published
Apr 9, 2021

Sales growth and the sky-rocketing popularity of e-commerce have driven Kering to rethink its logistics. On Thursday, the French luxury group, whose brand portfolio includes Gucci, Saint Laurent and Balenciaga, unveiled its gigantic new ultra-modern logistics hub in Trecate, near Novare, in Piedmont, Italy. The project, which has been described as "ambitious" by the company's management, brings together all of Kering's European logistics and operational flows at one site and seeks to strengthen the group's global logistics capabilities. 

"Over the last few years, the group has grown significantly and at a sustained rhythm. This trend has accompanied a similar shift in the whole luxury sector, notably due to the growth of e-commerce, which has necessitated ever faster deliveries, while consumer expectations have also raised in terms of service and experience. In order to respond to their current and future needs, we have completely redesigned our logistics structures," said Kering CEO Jean-François Palus during a live videoconference from Trecate. 

"Our previous storage centers were fragmented. Focusing everything in a single location will allow us to reduce costs and delivery times across all sales channels. This project changes everything. From now on, we are going to be dealing directly with the end customer. The rhythm will be completely different and much faster too. It will change our flows, our transport methods, our IT systems. There will be changes at every level, representing quite a large part of our operations," he continued. 

As well as this new hub, which centralizes all of the group's European operations in Italy, Kering has also reorganized its global logistics, as explained by the company's director of supply chain and logistics, Sorin Ciocan. "We have transferred our central American warehouse to a new site in Wayne, New Jersey, which has been operational for a year. A few days ago we also opened a new logistics hub in Dubai, which will serve the Middle East, and we are doing the same for Asia, with a hub that will probably be set up in Singapore."
 
Kering has managed its European logistics from Switzerland for the last 20 years, using a network of some 20 warehouses, through which almost all of its brands' stock and deliveries transited. But this model had reached saturation point. In 2019, the group therefore launched its Italian project, which already has "a delivery and shipping capacity 2x larger than that of the previous structure in Switzerland." Some of the staff from Kering's prior European network have been moved to Italy. The only site that the company is leaving active in Switzerland is its historic headquarters in Cadempino, Ticino, where "certain competences will be maintained."

Located between Turin and Malpensa International Airport, some 55 km away from Milan, the Trecate hub sits "in a strategic position at the key communications crossroads of northern Italy." The facility is spread over 162,000 square meters – the equivalent of 20 rugby fields, as pointed out by Kering – and allows the group to "take over the management and rationalization of the whole logistics process," while also "controlling the supply chain from end to end." A first building was opened in March 2020, while a second measuring 100,000 square meters is scheduled to begin operations in September. The whole site is expected to be totally operational by 2022. 

According to Kering, the impressive flexibility of the site, which "combines state-of-the-art technology and automation" is one of its main advantages. "The hub will meet the demand from regional warehouses, retail stores, wholesalers and e-commerce worldwide, and will significantly increase the group’s capabilities in terms of shipping (up to 80 million pieces per year) and storage (up to 20 million pieces). It will also allow to reduce lead times by 50% by increasing the speed of deliveries and to enhance collaboration with the group’s brands," added the company. 

Palus did not divulge the size of the investment in the project, revealing only that it is the company's "largest investment in Italy." "It's not a question of money, but of competences. We have invested in the implementation of a very efficient team in terms of expertise and technology," he added. 

The Trecate hub is run by Kering's long-term logistics partner, XPO Logistics, which employs the site's workforce. The number of employees at the facility is currently 250 and should rise to 900 by the end of 2022. 

Designed to reduce energy and water consumption, the hub has been constructed with cutting-edge technology, with a particular focus on sustainable development. The huge expanse of photovoltaic panels installed at the site – one of the largest rooftop solar energy systems in Europe – will cover the hub's energy needs, as well as those of the majority of the group's boutiques in Italy.