Executive Briefings

Stage Stores' Multi-Channel Distribution Strategy

Stage Stores operates 850 small-footprint department stores across the country, including the Peebles, Bealls and Goodys chains. Gough Grubbs, senior vice president for distribution and logistics, explains why the company adopted a centralized distribution strategy and how that strategy is supporting corporate growth.

For traditional retailers, there is an ongoing debate as to whether online orders should be fulfilled from stores or from a centralized DC. "There is no one-size-fits-all answer to that question," says Grubbs. "Since Stage has fairly small-footprint stores, we found there was a lot more efficiency for us in coming back to a centralized solution."

A number of factors went into this decision, he says. "We looked at our depth of inventory in the stores, backroom space, how much it cost to deliver from the stores as opposed to larger shipments going out of a DC, and questions of staffing," he says. "For us, there a lot of advantages to centralized distribution that could only be matched if you have very large stores."

Stage Stores has three DCs, in Ohio, Virginia and Texas. The Texas DC is the largest and serves as the e-commence fulfillment center.

"We have 470 people working at the Texas facility, which means we have a large pool to draw on during peaks," he says, noting that during the pre-Christmas peak staffing needs are 16 times normal. "If we can draw from existing staff and couple that with some short-term temporary help, it lessens the burden. Also, we can justify more technology, such as the voice picking system we currently are installing" he says. "These things would be much more difficult to do at 850 stores."

Stage Stores does not allocate separate inventory for online orders, but picks those orders along with orders from stores. "We didn't always do it that way, but we found we are better able to leverage our inventory if we treat a pick as a pick, whether it is for a home consumer or a store." Additionally, a centralized system allows Stage to offer items online that it doesn't have room to stock in its retail stores.

Going forward, the growth in online sales has diminished the number of new stores Stage plans to open, says Grubbs. “Instead, we are funneling those capital dollars into supporting and expanding our e-commerce business.”

To view the video in its entirety, click here

For traditional retailers, there is an ongoing debate as to whether online orders should be fulfilled from stores or from a centralized DC. "There is no one-size-fits-all answer to that question," says Grubbs. "Since Stage has fairly small-footprint stores, we found there was a lot more efficiency for us in coming back to a centralized solution."

A number of factors went into this decision, he says. "We looked at our depth of inventory in the stores, backroom space, how much it cost to deliver from the stores as opposed to larger shipments going out of a DC, and questions of staffing," he says. "For us, there a lot of advantages to centralized distribution that could only be matched if you have very large stores."

Stage Stores has three DCs, in Ohio, Virginia and Texas. The Texas DC is the largest and serves as the e-commence fulfillment center.

"We have 470 people working at the Texas facility, which means we have a large pool to draw on during peaks," he says, noting that during the pre-Christmas peak staffing needs are 16 times normal. "If we can draw from existing staff and couple that with some short-term temporary help, it lessens the burden. Also, we can justify more technology, such as the voice picking system we currently are installing" he says. "These things would be much more difficult to do at 850 stores."

Stage Stores does not allocate separate inventory for online orders, but picks those orders along with orders from stores. "We didn't always do it that way, but we found we are better able to leverage our inventory if we treat a pick as a pick, whether it is for a home consumer or a store." Additionally, a centralized system allows Stage to offer items online that it doesn't have room to stock in its retail stores.

Going forward, the growth in online sales has diminished the number of new stores Stage plans to open, says Grubbs. “Instead, we are funneling those capital dollars into supporting and expanding our e-commerce business.”

To view the video in its entirety, click here