MILAN — Kering is taking “a quantum leap” to further support the growth of its brands, said Jean-François Palus, managing director of the French group, presenting the group’s new state-of-the-art global logistics hub in Trecate, Italy.
During a virtual press conference on Thursday, Palus underscored “the magnitude of the project” first revealed in 2019 and carried forward despite the restrictions caused by the COVID-19 pandemic.
This single new hub, covering more than 1.7 million square feet, equivalent to 20 rugby fields, “embodies Kering’s omnichannel strategy like never before,” said Palus, explaining that it will enable the company to support the further growth of its brands and it is the group’s response to a scenario that has dramatically changed.
“This growth trajectory and the evolution of the luxury business, notably the rise of e-commerce and the need for faster deliveries, led us to start an in-depth analysis of the adequacy of our worldwide logistics network in Asia, America and Europe, for present and future business requirements,” Palus said. “We went for a complete redesign from the ground up, investing in ad-hoc facilities in Europe, North America and Asia.”
Aiming at enhancing the operational efficiency of its brands in terms of IT, new technology, e-commerce, supply chain management or logistics is key for the group, the executive continued. All the main logistics flows will be concentrated in Trecate, where products will be stored and then distributed globally.
Trecate, near the town of Novara, is less than an hour’s drive from Milan and 13 miles from Malpensa airport.
Construction began in April 2019 and although the first part of the building has been operating since March last year and the second part — over more than 1 million square feet — is scheduled to be operative by the end of the second quarter of 2021, this was the moment, said Palus, “to recognize the efforts of our teams and present you the first achievements as well as give you a clear idea of where we’re heading.”
This complex replaces “a fragmented and saturated” structure of 20 warehouses, offering larger storage capacity, “room for scalability and the ability to fulfill the increasing demands of interconnection with key transportation hubs,” Palus said.
The site will result in a significant reduction in logistics costs, inventory levels and lead times, ensuring true omnichannel services through “faster distribution in all channels, better product availability and optimized inventory,” while improving working conditions of employees.
“An agile, flexible logistics infrastructure in the situation we are currently facing with the pandemic” is essential, he noted, in particular “to redirect the flow of pieces to where they are most needed. In a context of a demand-driven supply chain, logistics is a strategic area, in order to make Kering a leader also in terms of scale and agility.”
The site will generate strong business benefits, meeting the demand from regional warehouses, retail stores, wholesalers and e-commerce worldwide, allowing to reduce lead times by 50 percent, better servicing brands and customers, and lowering cost per piece by 25 percent.
Palus underscored the importance of Italy for Kering, “a country like no other,” home to many of its brands, and a country where the group has channeled several important investments “in artistic and artisanal” competences. To name one as an example, Gucci’s ArtLab leather goods and shoes industrial complex in Tuscany.
Palus declined to provide a figure for the investment in Trecate, but said it was “the largest made in Italy — but this is not only about money, it’s about skills and competences, building a very efficient team, upgrading competence and technologies.”
Sorin Ciocan, group supply chain and logistics director, said shipping capability will increase to up to 80 million pieces and storage capability will be up to 20 million pieces. The hub will be able to ship the products to more than 80 countries and e-commerce orders will be handled in less than three hours.
Transforming its worldwide logistics network in Europe, America and Asia to become fully omnichannel, Kering has also completely redesigned and moved its central warehouse in the U.S. to a new location in Wayne, N.J., in a larger warehouse which is now fully operational. It has created a hub in Dubai for the Middle East and it plans to set up a regional hub to cover Asia in 2021, which “most probably” will be located in Singapore, Ciocan said.
The Trecate site is expected to become one of the largest rooftop solar systems in Europe, with 12.7 MW solar power panels installed on the roof at the completion of the second building, with an estimated saving of 7,500 tons of carbon dioxide a year.
The site will also be the first industrial complex in Italy to produce more energy than it consumes and the energy produced in excess will be transferred to the Italian electricity grid and distributed to Kering stores and corporate offices in Italy.
The buildings will be certified LEED, with a rating expected to achieve Platinum. “Offices are also pursuing the WELL certification to guarantee the best work environment for all employees, with the target of achieving Gold rating,” Ciocan said. “The hub is a truly healthy and pleasant working environment, which is our first commitment, with such features as enhanced ventilation, air quality control, optimal indoor temperature and humidity, ergonomic workstations, individually adjustable lighting, reduced noise, low emissions, areas for relaxation and fitness, and a high-standard healthy canteen.”
The hub was also relevant during the peak of the pandemic as it enabled the distribution of the personal protective equipment needed for all Kering employees in Europe, reaching 700 sites in 23 countries, sending out in less than 12 months 9 million surgical masks, 190.000 bottles of sanitizing gel, as well as millions of sanitizing wipes and gloves.
The complex will count around 1,000 employees at full capacity by the end of 2022. There are currently 250 employees and the goal is to hire 180 by the second half of 2021 for engineering, IT and operations roles.
A number of employees who used to work in Cadempino, near the Swiss city of Lugano, have been repatriated to Trecate. Only a number of specific activities and some warehouses will remain in the Swiss town.
The move pertains to all brands under the Kering umbrella, ranging from Gucci and Balenciaga to Alexander McQueen, Bottega Veneta and Pomellato.
The site is operated by XPO Logistics, Kering’s longstanding logistics partner, which employs the on-site workforce dedicated to warehouse operations.