By Liam McElroy, managing director at Wincanton
The festive season is well and truly upon us. It’s the time of year that retailers have been both eagerly anticipating and dreading. Events such as Black Friday and Cyber Monday have kicked off the busy retail period this year, with spend hitting £6.45bn over the period on digital purchases alone.
Both once again proved themselves to be unpredictable, with reports showing that shoppers spent more time in physical stores than expected. Footfall rose by 2% against Black Friday last year, compared with a forecast fall of 5%. Additionally, online sales fell short of forecasts, rising by just 6.7% against Black Friday last year, compared with a forecast of 25%.
Despite Black Friday’s surprises, online shopping and in particular mobile shopping is still on the rise. Forrester Research recently projected that the mobile payments market will jump to $142bn by 2019. As a result, delivery is now a major battleground for retailers as changing consumer expectations place greater emphasis on speed, enabled by these mobile technologies supporting faster and more reactive purchasing decisions.
To thrive in the ever-competitive world of e-commerce, retailers must delight their customers at every stage of the journey – including delivery and beyond – no more so than at Christmas time. As a result, retailers are investing huge amounts of money in creating elaborate Christmas adverts, that tap into consumers’ emotions and connect with their chosen brand or store during the festive season. And it seems to be working. In 2015, John Lewis saw a surge in shoppers using its website following the launch of its ‘Man on the Moon’ advert, boosting Christmas sales by 5.1% compared to the previous year.
Despite the draw of festive cheer, consumers aren’t as patient as they used to be, and while faster delivery options, such as next day and even same day delivery are helping the industry take huge strides in meeting customer expectations, they have to work hard to keep customers coming back. When consumers are becoming absorbed in buying the perfect gifts for their loved ones, they rely on the retailer to make the process as easy as possible, and ultimately, deliver what is promised, at a time that suits them.
As a result, now more than ever, there’s a strategic imperative to shift goods quickly and efficiently during these busy times. And the stakes are high – with competition for each and every pound spent getting fiercer every year, retailers can ill afford to let the side down when it comes to fulfilling orders.
At Wincanton, we manage the logistics supply chains of some of the UK’s biggest retailers. This means we’ve seen first-hand how changing consumer behaviours are impacting upon periods of peak demand like Christmas – the festive season now starts even earlier in the year and the emergence of new set-piece shopping events like Black Friday are re-writing the rule book on peak planning.
Through collaborative strategies, efficiencies are being gained while costs and waste are being reduced. Of course, sharing deliveries also provides environmental benefit as fewer deliveries are made and load fill within delivery trucks is maximised.
More than anything, shared solutions in terms of warehousing or transport can provide retailers with greater freedom to flex their distribution operations to suit demand at any one time. This is particularly useful to accommodate seasonal peaks and control costs in quieter periods.
Logistics providers are able to help their customers do this by unlocking the operations puzzle so that retailers can achieve maximum profitability, reduce waste and lower the cost to serve, while ensuring customer-centric and efficient operations that meet customer expectations during these busy periods.
For example, over Christmas and New Year 2015, Wincanton implemented a number of innovative strategies to ensure that its network ran as efficiently as possible to support some of the biggest retail brands in the UK. For example, we developed a tactic to assign drivers and vehicles from our construction operations, which experiences lower demand in the run up to Christmas, and redeployed them in our retail operations to provide added capacity and ensure the sustainability of our operations.
Ultimately, peaks in customer demand are driving new ways of working across the sector, which is no bad thing. The increased flexibility of routes to market also highlights the importance of brand consistency and levels of service. No matter how they interact with the retailer, customers expect the same service levels and brand experience.
The wider evolution of consumer behaviours – including the growing use of online shopping and home delivery – means that ever shortening delivery times and customer experience at the point of pick-up will continue to be a brand differentiator for years to come and will remain of critical importance to consumers in deciding where to spend their money. Especially at Christmas time, after all the hard work and planning, it’s the final impression that counts.
(A Retail Times’ sponsored article)