Massive Fire Guts 11M Units at Korean Fashion DC, Disrupting Black Friday Flows
One of South Korea’s largest fashion warehouses was forced to close after a massive fire nearly burned down the complex on Saturday, significantly hampering inventory at a major fashion and retail conglomerate in the country ahead of its Black Friday sales event.
E-Land World, a South Korean retailer that generates 51 percent of its sales from apparel and fashion merchandise, operates the distribution center. The retailer licenses brands including New Balance and G-Star, and owns labels including SPAO, Hunt, Who.A.U. and Roem, among others.
The 2.1-million-square-feet site in Cheonan, South Korea hosted an estimated 11 million products, including clothing and footwear, at the time of the fire.
The fire started at the four-story logistics center, which is located roughly 90 kilometers (56 miles) south of Seoul, at around 6 a.m. The main blaze was contained at 3:30 p.m., about nine and a half hours after the fire began, according to firefighters. It took 60 hours to extinguish the full fire.
The northern section of the warehouse partially collapsed, while the southern exterior was stripped away by heat and flames. A structural engineer at the site said the building’s internal supports had likely failed from within due to heat stress.
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To put out the fire, authorities mobilized 430 personnel, 11 helicopters and 150 pieces of equipment. The exact cause of the fire is currently unknown, and will be determined after a detailed investigation, authorities said.
The full extent of the damage from the fire is expected to be assessed after an on-site investigation scheduled for Friday.
E-Land Fashion unveiled Sunday that deliveries of some products would be delayed or canceled in the wake of the fire. Orders of products that could only be delivered from the Cheonan logistics center were canceled.
Various brands, including New Balance, posted similar notices on their websites.
“Unexpected delays in logistics center operations have caused some orders to be shipped later than usual,” New Balance said. “Products are being prepared for shipment in sequence.”
Following the fire, E-Land ramped up operations at its domestic and overseas production sites to minimize disruptions to supply during its Black Friday event, which began Monday.
“We have suffered enormous losses as a result of this accident,” E-Land World CEO Cho Dong-ju said in an internal email to employees on Wednesday. “What pains me most is that all the valuable products we spent so long preparing have been destroyed.”
Cho pointed to the benefits of the company’s “two-day, five-day” production system in keeping the company’s inventory afloat during the sale. That system is designed to test market response with small-batch production at domestic sites over two days, then proceeds to mass production by overseas partners over five days.
“New products produced at our domestic facilities are arriving at stores in less than two days,” he said. “Winter items are also being produced at an incredible pace at our overseas factories.”
In the note, Cho said the group’s logistics infrastructure and hub logistics system has enabled the retailer to quickly stabilize online deliveries and minimize inconvenience for customers.
“Most new winter products have already been shipped to stores nationwide,” according to a company statement on Monday. The retailer said products are continuing to be shipped from stores and other distribution centers.
According to E-Land, the retailer gave customers individual guidance on orders that required additional cancellation through its customer center. The company waived all fees for order cancellations if the delivery date was delayed.
No injuries or casualties were reported in the blaze. During weekdays, around 500 people typically work at the warehouse.
Before the fire, the four-floor facility could process up to 50,000 parcels daily and 4 million to 5 million parcels annually, and accommodate 150 trucks simultaneously. The site was completed in 2014.
The fire is expected to impact the company’s financial performance given the high concentration of goods at the impacted warehouse.
Ahead of the incident, analysts expected E-Land World’s consolidated sales to be between 5 trillion Korean won ($3.4 billion) and 6 trillion Korean won ($4.1 billion) this year. E-Land’s consolidated sales and operating profit increased by 3.9 percent and 31.7 percent for the first three quarters of the year.
During that period, E-Land’s fashion business sales amounted to 2.53 trillion won ($1.7 billion).
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