Sephora plans to open distribution centre in Utah
Utah to reduce transportation costs as oil prices put pressure on
margins.
The cosmetics company will open the centre on the west side of Salt Lake City creating 500 jobs in the region, according to press reports. "They've been trying to find a place in the western United States to build their center," Jeff Edwards, the president of the Economic Development Corporation of Utah, told Associated Press. Cutting down on transportation costs LVMH-owed Sephora's Utah distribution center will serve customers west of the Mississippi River and according to Edwards the move is an attempt to cut down on transportation costs due to increased oil prices. "Now that fuel costs have risen, it makes sense to have smaller distribution centers nationwide to help reduce shipping costs. Utah is within a one-day trucking distance from California, Seattle and Portland" Edwards said. It is not just cosmetics retailers and manufacturers that are feeling the strain of rising oil costs - the effects are being felt industry wide. Rising ingredients costs In particular, an increasing number of ingredients suppliers have recently announced plans for prices rises. Earlier this month Sun Chemicals Performance Pigments Division announced price increases for its range of pigments used in the cosmetic industry to come into force March 31st. The company cited rising raw material, energy and transportation costs as reasons behind the increases. Croda and Rohm and Haas are two more leading global ingredients suppliers who have recently announced rising ingredients costs. For Croda these changes have been significant - the prices of the company's ingredients have risen by an average of 12.3 per cent over the course of 2007. In addition, finished products manufacturers Procter & Gamble, Colgate-Palmolive and Kimberly-Clark have all mentioned high oil prices as a factor that had a negative impact on their profits in recent financial statements.
