The retailer implemented ship-from-store capabilities across its entire fleet two years ago, which Elfers called a “significant competitive advantage.”
“If we had not made these digital investments when we did, we would be losing significant market share and brand loyalty at a critical time,” she said, and later noted, “obviously we have the stores really pitching in now to help with the social distancing going on in the DC.”
Based on some of the safety protocols the retailer put in place amid COVID-19, capacity in The Children’s Place’s distribution centers (DCs) is somewhat limited.
“When we look at ship-from-store economics, obviously, they don’t have the equipment that our distribution centers have,” COO and CFO Mike Scarpa said.
He estimated, concerning labor productivity, the stores operate a 40% productivity level of the retailer’s DCs.
“Obviously our order size has increased nicely in these last couple of months, and we are seeing our units per transaction (UPT) is actually up over 20%,” he noted. “So what we are incurring is, splits associated with that, which drives freight costs up, probably in the 40%-60% range compared to when we’d normally ship complete orders through. So not the most economical situation for us, but we are thrilled we have the ability to expose store inventory, ship-from-store and meet moms’ needs and reduce our overall inventory burden, as we move into back-to-school.”