US fashion group Levi Strauss & Co. has laid the foundation for a new distribution centre in Dorsten, Germany. Time seems to have stood still in this little town while the machines in the excavation pit are working at full speed - because this is where the denim group is building its new European logistics hub. FashionUnited spoke to Torsten Müller, Levi's vice president for distribution and logistics for Europe, South Asia, the Middle East and North Africa, at the groundbreaking ceremony.
Wearing a Levi’s 501 jeans, a sweater by the brand with “Dorsten” printed on it and a white construction helmet on his head, the head of logistics presents the site on which Levi’s will construct three buildings by the end of 2024. These will be the starting point for shipping 55 million units and the creation of hundreds of jobs. Müller hopes not only to set an example for sustainability with this landmark project, but to also open a new chapter for distribution in Europe.
What made you decide on Dorsten as a location?
We already have a warehouse in North Rhine-Westphalia (NRW) - from Unna, we sell and distribute goods throughout Europe. This is one of seven locations in Europe. Due to the growth Levi's has had in recent years, we have come to the conclusion that we need more storage capacity. Then we drove through Europe and looked for locations - and ended up in Dorsten because it is an excellent location due to the transport connections and the central location in Germany itself. In addition, you very, very rarely find large contiguous areas – it was a perfect fit. Location indeed is an important factor – it is literally the labour pool, availability, size and cooperation with the community that drove the decision.
What does the new distribution centre mean for Levi's?
For us, the distribution centre is the opportunity to operate distribution on our own. It helps us to pursue our omnichannel strategy in Europe and also to make a mark in terms of sustainability. At the end of the day, "you own your own destiny" - we gain flexibility, which is again related to the omnichannel strategy and also supports our overall growth strategy in Europe. Here, we work together with service providers except for one warehouse. This will be the second warehouse here that we will operate ourselves. That was a conscious strategic decision because we will move to a size where you should do it yourself.
How does the new distribution centre support Levi's omnichannel approach?
It is really about the omnichannel approach, serving all channels and all products of Levi’s. It will enable us to have customers shop where they want to shop. We're basically the backbone of that and that's the importance of the distribution centre.
How does the new distribution centre change inventory flows at Levi's in Germany and in other countries?
Little - because we have a warehouse an hour away from here. The physical inventory flow will continue to come from Rotterdam, and then to NRW - to Unna and then also to Dorsten. That means at the end of the day we will have two warehouse options instead of one. Therefore, inventory flow is not significantly affected. What we are considering is working more sustainably and more closely in time to collect the goods or withdraw them from the ports. The distribution centre will be in the centre of Europe - in NRW!
Dorsten as Levi's 'European hub' – what does that look like in practice?
The big advantage of using a warehouse is that you end up with one inventory instead of several. That means if the inventory is not there in the store, I can pull it out of the warehouse and ship it to customers from the warehouse. That is the quintessence of the omnichannel idea. And a warehouse of this size and with the speed with which we can process orders here can be a very important pillar for the omnichannel strategy. It's also about simplifying and compressing processes.
What does the new centre mean for North Rhine-Westphalia and how will Levi's contribute to the region?
Levi's is definitely an attractive employer and can also be a trendsetter with what we do here. So I see these advantages for the region as very convincing.
We already hired six persons until now, in corporate functions, in HR, IT and project management. We really want to recruit from the region, in order to boost employment and to participate in its economic revival. By 2026, we are planning to recruit 650 people – so we will have to speed up the pace of recruitment in the coming months!
Has the current political situation in Europe and the war in Ukraine had a direct impact on Levi's business?
Indeed, given the situation in Russia, we decided to stop our operations and have closed all of our stores there – temporarily. We will continue to assess the situation. The products that were supposed to be delivered to Russia are on hold and we will use them elsewhere; we never waste any products. What we do is, we donate them in most of the cases – especially in regards to the Ukraine crisis.
In Europe, for the past couple of years, we already have a huge focus on supporting refugees, not only now in view of the current crisis. We have different partners in Europe and are working with Good360, Safeplace International and many other charities in every market. We send products to different parts of Europe, for example to camps in Greece, where some refugees are reaching. In the Greater Munich area, we are working with a charity called “Heimatstern” for homeless people, making sure that all our products are used somewhere.
What obligations does a label and company like Levi's have in connection with Russia?
We donate clothes to some charities and some employees also decided to house refugees. Currently we have already shipped more than 40,000 products to charities in neighbouring countries around Ukraine.
LS&Co. donated more than 300,000 US dollars to nonprofit organisations providing aid to those most affected by the crisis. The company also organised a fundraising campaign among all employees and is matching employee donations 2 to 1 up to 200,000 US dollars for a number of organisations providing humanitarian relief on the ground in and around Ukraine. And then together with our licensee partners, we are donating clothes to those who have been driven from their homes.
How do you assess the long-term consequences of the current situation with the Ukraine war and how will Levi's deal with them?
I would summarise it this way: we are making this investment to stay in Europe. And this is a major investment, we are planning to ship about 55 Million units from here, that is a clear commitment to the market and the growth we are seeing in it.
The fashion industry is changing faster than ever. Fast-forward to the year 2042 – what will the Dorsten distribution centre look like?
The wish is indeed that we will stay, that people will continue to enjoy coming to work here. That people accept us and see us as a very good corporate citizen. Who knows – there might be other things happening. Let’s first open it in 2024, and have full capacity in 2026.
How are these sustainable approaches implemented for the future employees?
We will use photovoltaics and geothermal energy and use rainwater in the building – for flushing the toilets, for example. For us, the whole topic of sustainability starts with Cradle-to-Cradle, with our building materials, special thermal insulation, etc., and then goes on as far as it is feasible. A portion of the site, approximately two or three hectares, will be left in its original green state. We'll probably have a way for staff to go there on their breaks. We try to do a lot and also to do things differently than others. We're on the right track. You don't build warehouses every few years; it is one of the biggest projects for us and as such, it is certainly one of the most sustainable buildings for Levi's.
And the sustainable idea does not stop with the building materials.
We are also looking to get a WELL-certification which has to do with the working environment, as far as I know that is unique for a distribution centre. From the lighting in the facility, to ergonomics and avoiding heavy lifting – it goes above and beyond. Next to the office building there will be social facilities. What is not visible in the rendering is the facility for the operative activities, it will be around 22 metres high and will contain the inventory. The buildings will act as natural noise control for the connecting street. It is literally the spirit and the company making this future investment. What we are trying to do is to create an environment that is a bit different than most distribution centres. It will speak for itself in 2024.
This article was originally published on FashionUnited.de, and translated and edited into English by Simone Preuss.