Advanced Facility Enhances Retailer’s New Hybrid Fulfillment Strategy and Direct-to-Consumer Sales
Levi Strauss & Co. has partnered with logistics giant Maersk to manage a large omnichannel fulfillment center in Ohio, marking a significant shift towards a hybrid distribution model for the retailer.
On Wednesday, Maersk announced that its warehouse and distribution services unit began operations in August at a 1.2 million-square-foot distribution center located in Groveport, Ohio, specifically for Levi’s. The logistics company recently leased the facility, taking over the processing of wholesale, retail, and e-commerce shipments that were previously managed at another Levi’s location, as confirmed by a Maersk spokesperson.
This facility plays a crucial role in Levi Strauss’ initiative to prioritize direct-to-consumer (D2C) sales and enhance its supply chain operations. It represents the 10th global facility that Maersk operates for the retailer. Having evolved from a leading ocean shipping company, Maersk has expanded its services to offer integrated logistics solutions to multinational clients like Levi’s, including order consolidation at international origins for shipping by air and ocean.
The D2C channel, through Levi’s own retail outlets and e-commerce platform, is rapidly becoming the company’s fastest-growing segment, as it shifts focus away from its wholesale operations.
During the second-quarter earnings call, management revealed their decision to transition from a largely self-managed distribution and logistics network in the United States and Europe to one that is more balanced, incorporating both company-owned facilities and those operated by third-party logistics providers (3PLs). The D2C strategy necessitates investments to enhance current capacities with omnichannel capabilities. By outsourcing fulfillment activities, Levi’s anticipates a reduction in per-unit costs and savings exceeding $90 million this year, primarily due to avoiding the construction of a planned distribution center in Germany, as stated by Harmit Singh, the company’s chief financial and growth officer.
In Europe, Levi’s has also enlisted GXO Logistics as a 3PL partner.
Craig Jones, the company’s senior vice president of global distribution and logistics operations, emphasized the need for realignment in the network to better meet customer demands and support D2C-focused growth. He noted, “This Maersk-designed and operated facility is a vital component of our strategy to shift towards a hybrid distribution and logistics network that balances omni-capable owned-and-operated facilities with advanced 3PL facilities like this one. Collectively, this will enhance customer experience, capacity, on-time performance, and operational efficiency.”
The new facility is expected to lower Levi’s operating costs while decreasing container handling times and improving overall speed and efficiency. Located near Columbus, Ohio, Groveport benefits from a high concentration of retail distribution centers and excellent highway access, enabling the company to reach more U.S. consumers more quickly.
In the coming months, Maersk plans to install high-speed sortation systems from EuroSort, capable of processing 100 million outbound units annually. The facility will implement the latest version of Maersk’s proprietary warehouse management system to further boost operational efficiency. Maersk operates over 85 warehousing facilities throughout North America.
