warehouse racking

Supply Chains cracking under pressure

There is still a faint echo from the tills ringing on Black Friday and the mouse clicking on Cyber Monday, but that sound is being drowned out by the sighs of frustration from customers waiting for deliveries to arrive. We predicted that some retailers supply chains and processes wouldn’t be able to cope with the volume and frustratingly, we were proved right.

The volume of orders far exceeded expectations, for Tesco and for other retailers including Argos and Marks and Spencer, and the price of that success is the cracks that have appeared in their supply chains: deliveries to customers are late.

The reasons for the delays are varied, anything from shortage of pick and pack hours in the DCs, over capacity for the couriers, or lack of actual stock to fulfil the order. And it isn’t just home deliveries that are affected; there are delays in click and collect too, pointing to logistical capacity constraints.

Added to these woes are in store click and collect processes. For instance, the grocer’s click and collect desk in many stores is at the front door. The queues that build up at peak times impede the entrance and exit, and the boxes that pile up at the desk make working the whole experience frustrating.

The growth of online sales and click and collect as a delivery option has been steep but one that could be predicted. Quite simply retailers haven’t planned for the growth that has so far materialised and are now failing in terms of customer service. An easy shopping experience online, to avoid the crush of shopping in store, results in a crush in store to collect the parcel.

Planning and process are the keywords for the next 2 weeks, and then beyond. Stores must be planning for best/worse case scenarios, whether that adds cost to fulfilment or not because the cost of a customer who hasn’t received their delivery in time for Christmas is far greater. In store processes for click and collect must be as efficient as possible. The physical volume of boxes as well as the quantity of orders and therefore customers must be managed to make the collection (and returns) experience as smooth as possible. Assign a runner to get the parcels from the stock room, and take them to the customer’s car to get them out of the shop.

The cost will be in terms of man hours, which reduces margin, but as Tesco has experienced, a rebasing of margin in order to deliver customer service is an investment worth doing. The Christmas peak may be less pronounced this year as sales have been brought forward thanks to Black Friday, Cyber Monday and Manic Monday but there will still be a peak. Retailers have time to put provisions in place to manage that peak if they are agile enough. If not, expect a peak in customer complaints as well.

Keeping up with Mike Ashley

Mike Ashley, touted as the man with the golden touch, doesn’t quite have all the luck it appears.

He isn’t what you would call a typical CEO: lack of charisma, no publicity, beer swilling and a tendency to park his tanks on other people’s lawns. He has been asked to stand before the Scottish Affairs Committee about his role on the collapse of USC and buy out resulting in 200 redundancies. He is also subject to a formal complaint from his zero-hours workforce who were excluded from Sports Direct’s bonus scheme.

He has kept his Strategic Development Director, Jeff Blue, more than busy buying up shares in House of Fraser and Debenhams, looking for concessional space at a shareholders preferential rate, and tasking him with the Finance Director role while an appointment is made. Jeff Blue has left the building though, leaving suddenly just 2 days before Sports Direct Q1 trading was announced.

On the face of it the business has delivered another strong quarter and the profit forecast for the year on track having tapped into a winning formula of brands (which Ashley bought at a discount) and a ‘pile it high’ proposition. But there are concerns on the horizon.

House of Fraser’s new Chinese owners are not inclined to offer preferential rates or indeed any rates to Sports Direct after the deal nearly knocked their bid off the rails. That may have been a punt that will be costly. The results of the pending inquiries could have financial implications, albeit a drop in the ocean, but the PR cost could be harder to swallow and the lack of senior leadership after Blue’s departure is a worry.

So what next for Sports Direct? Rather than an acquisition drive which is the default setting, a recruitment drive would be a good start. The business is complex, multiple businesses held by a controlling company, with operations and brands internationally. Senior appointments will need to be experienced and have a ‘ready for anything’ approach to business to keep up with Ashley’s ambitions and ego.


Retail Remedy provides bespoke, results-focused consultancy for retailers globally, from established brands to high-growth start-ups. Get in touch.

Matalan comes out of the shadows

Family owned Matalan isn’t often talked about. The out of town fashion and home wares retailer operating at the value end of the market competes against the likes of Primark and the grocers, and is, therefore, often overshadowed. However, after a visit to one of its stores recently we got the feeling that Matalan may be about to become more of a threat to its bigger rivals.

The last reported quarter of trading ending in November 2014 didn’t make great reading, suffering as many fashion retailers did, with overly warm weather for the season, however CEO James Hargreaves also reported a resilient margin. Christmas trading didn’t fare much better but news that the retailer came out of Christmas with less residual stock than in previous years was well received as was the prediction of full year profits growth.

In 2014 Matalan moved to a bigger head office in Skelmersdale, opened its first High Street store in Cardiff and signed a lease to open its first Oxford Street store in London which is expected to open this spring. For a retailer that sits under the radar, they appear to be quietly going places.

Its main competitor Primark has a strong High Street presence which Matalan has lacked. However, we predict that the lead onto city High Streets is destined to deliver a good sales density for the retailer if the store that we visited is anything to go by. We were enthused by the clarity of communication, good product quality, strong product mix, fashion led collections, in house designer labels and very good pricing which can easily compete in its market.

Matalan has taken its time to reach the High Street, waiting for the perfect store in the perfect location, knowing that it had to be right. This has undoubtedly held the retailer back in terms of gaining market share in a growth market, but may turn out to be the right decision. Location is everything and the roll out programme to other High Streets will probably be slow.

A refinancing exercise in 2014 has given Matalan the security to invest in the brand and its future and although the efforts that we have seen in store haven’t yet translated into financial results, if Matalan keep on track we certainly expect that the results will come through in the next few seasons. As they say, watch this space.


Retail Remedy provides bespoke, results-focused consultancy for retailers globally, from established brands to high-growth start-ups. Get in touch.

Are High Streets coming back into fashion?

We are all familiar with the cycle of fashion; flares come and go, beards are seeing a growth in popularity and vinyl fights back. In the same way retailing can go in cycles; local farmers markets are booming, hypermarkets are downsizing and personal shopping experiences are valued.

Is it now time for High Streets to come back into fashion?

The Local Data Company published this week that there has been a drop in store vacancy rates in the UK as a whole, but there is a huge disparity between the north and the south with the north east having more than twice the number empty stores as London.

There are countless reasons why retailers close down, rates and rents play some part, poor management and lack of agility to respond to competition play a part too, but the squeeze in margins that online retailers have placed upon bricks and mortar stores have mean that rates and lack of agility are compromised because of lack of cash, caused by weak margins. And so the vicious cycle started.

And yet, we read this week that Amazon is putting together a deal to buy Radioshack in the US because it wants to showroom its products to the consumer, in stores, on High Streets.

John Lewis, which is held as a success model of omni-channel retailing in the UK, credit some of the success of their online offer to the stores themselves, claiming that customers wouldn’t buy online without having first checked out their purchase in store first. There is more to it than that, not least of which the ‘never knowingly undersold’ promise, but for John Lewis the model works.

Made.com opened another UK store in London, believing that online can be significantly supported by a store and presumably forecasting that the costs associated with running a store are more than offset by the benefit.

And so the cycle of retailing looks to take another turn. Amazon and Made.com are leading and may not succeed but where one leads, others follow, learning as they go and subtlety modifying the model each time. Opening a showroom is not the same as opening a chain, but fashion goes in cycles and who would have predicted 10 years ago that hypermarkets would be overshadowed by convenience store expansions.


Retail Remedy provides bespoke, results-focused consultancy for retailers globally, from established brands to high-growth start-ups. Get in touch.

Retail Trends for 2015

After the flurry of Christmas trading results it is time for retailers to take a step back (briefly) to assess what to do differently next year; how to prevent the same mistakes and how to build on the successes. If Retail Remedy was assisting in that exercise we would be looking at the following trends for inspiration.

Order fulfilment

After the massive volume spike following Black Friday and the surge in click and collect, we expect retailers to significantly invest in their delivery solutions and be seeking greater efficiencies and faster processing in store. Reliability will be the watch word, both internally and in terms of marketing themselves to the customer.

Another watch word will be collaboration. The Ebay Argos partnership is working well offering advantages to both retailers. Expect more to follow suit, utilising space and location.

Experiential retail

Digital mirrors, virtual catwalks, music gigs: the retailer is enticing the customer away from their tablets and back into stores by offering an experience, a gimmick, yes but one that can lure the curious and tempt the sceptical.

Experiential retailing isn’t limited to physical stores either. Where a website was transaction-centric, scoring sales through intuitive navigation and immediate stock information, the customer is becoming more sophisticated and expects a ‘wow’. This will take the form of interactive tools, how-to videos and editorial content designed to upsell. Of course, this is layered on top of a seamless transaction journey.

Tech

Ensuring that the right product is on the shelf in the right place at the right time is the back bone of retail particularly when sales are concentrated into a short time window. The way in which that exercise is performed is reliant on algorithms and integrated systems between the supplier, the retailer and the customer, shortening lead times and allowing increased agility.

Expect the customer to be using their mobile to scan their shopping, drones to perform stock checks in aisles sending live updates to suppliers as it goes, RFDI data to automatically update the price of the product on the shelf… eventually.

What shouldn’t change is that the retailer must always keep the customer at the core of what they do and how they do it. Perhaps we will see a trend towards more retailers being reminded of that.


Retail Remedy provides bespoke, results-focused consultancy for retailers globally, from established brands to high-growth start-ups. Get in touch.

The Grocery Christmas Story

The Christmas POS is down (mostly) and Valentine’s day merchandise and Easter eggs are on the shelves. The peak weeks are over for another year but how did the grocers do? We won’t know for sure until the trading statements are issued over this week and next, but city forecasts are not favourable on the whole.

Waitrose we already know pulled in a 2.8% like for like sales increase for the Christmas trading period, boosted by excellent online grocery orders despite a headline grabbing moment when delivery slots disappeared. The investment in brand and fulfilment has paid off and as a long term strategy will continue to benefit Waitrose as it trades through 2015.

We have seen that Lidl sold more champagne over Christmas than it did semi skimmed milk. Safe to say the advertising and the social media campaign #lidlsurprises, which will carry it through the year, is a winner. We expect that Lidl will start to close in on Aldi and could take the lead as the largest discount supermarket.

Meanwhile Tesco have dipped a toe into the discount playing field with a trial in three of the Tesco owned One Stop convenience stores. How, or if, this will fit into Dave Lewis’ plans will become clearer on Thursday with the release of its trading figures and a city announcement later in the day. Christmas sales will show a like for like decline but could be better than have been recently bolstered by Lewis’s tactical price cuts and staffing increases. The main message for Tesco when it reports won’t be how it traded but how it will trade in 2015 and what it will do about the long list of issues it faces, not least of which its redundant space.

Sainsburys are also expected to report a decline in like for like sales and with no significant investment in Black Friday won’t have changed its fortunes. 2015 for Sainsburys must be about rebasing its strategy and building on its brand values. The focus on Netto and competing with the discounters has caused a drift in strategy to the detriment of the brand and sales but by the same measure, so has complacency. A wake up call is overdue.

Morrisons will release its Christmas trading report next week but that could be the bigger story of Christmas 2014. Forecasts suggest it may have turned a corner; nothing as exciting as a sales gain but certainly a lesser decline than it has experienced of late. Watch this space.

Christmas wasn’t a winner for the majority but the grocers with the clearest strategic direction and best execution in store will have faired the best; the retailers that have been struggling, have continued to struggle.

The only guarantee for 2015 in the grocery sector is that it will be brutal and those in senior roles shouldn’t take anything for granted.


Retail Remedy provides bespoke, results-focused consultancy for retailers globally, from established brands to high-growth start-ups. Get in touch.

Team Building in 2015

Yep, you probably think you are doing team building already; reviewing the team wherever they sit in your retail operation, having one to ones and huddles to keep people informed and motivated, giving feedback and for the more enlightened even taking feedback. You might have had a few drinks over Christmas with the team and possibly had the results of the company 360º.

It may well be you are right, in which case congratulations, you are doing the one thing that elite sports teams have known for years but is largely side-stepped by business. Teams deliver because they understand each other, know the strengths and gaps that exist and work towards making the whole retail organization greater than any one individual (and yes that includes the boss). It’s this objective challenge and review that is so vital and yet so difficult to deliver. Looking in the mirror from a leadership perspective does not come easily to most people, (some of you will have reflected on this as you read it, others would have ignored the prompt!).

We often use MBTI analysis in our team build to add even further objectivity to the pot, to give some flash to the discussion and allow some of the areas needing attention to be recognised and planned for. Not always the most comfortable experience initially. Don’t come to us if you just want a nodding dog and a piss up with the team. We like to hold that mirror firmly and recognise the individual’s as well as the team’s impact. From there we can then start working on how we make the best of it. Helping build a Mission, Vision and Values that really mean something; to helping you construct a team’s rhythm that delivers the desired end result.

The other thing that we feel is a key ingredient in any team build is fun. We all learn more when we are relaxed and enjoying the process and it goes without saying that we only do fun team builds. If you want hyper-corporate, sit in an office staring at a PowerPoint type, please look elsewhere, there is plenty about, it’s not just us. If you want to take two or three days out to invest in the most dynamic way to build a team and create a plan for the forthcoming year(s) then we will be there like a shot. Inside, outside, UK or abroad we are more than happy to have a chat and get under the skin of the needs of the team. We have (obviously) taken feedback on the many team building activities we have delivered over the years and we are really proud to say we, and our retail clients, big and small, think they are epic. Could your team benefit?

Retail Remedy provides bespoke, results-focused consultancy for retailers globally, from established brands to high-growth start-ups. Get in touch.

The Waiting Game

It looks as though the research was right. 8.5 million people said they would wait for the post-Christmas Sales before buying their Christmas gifts this year, according to a study by Capital one. And John Lewis has reported that last week’s sales were down 2.4% on the year, having brought forward sales into Black Friday.

The simple truth is that the retail industry has trained the customer to expect mark downs and so they wait, they wait for their trigger price point and then they shop. The customer is confident that they can hold out longer than the retailer, and they would be right. The customer could shop elsewhere, or buy something else. The retailer is sitting on the stock, so of course his nerve will break before the stronger customer.

There is very little that a retailer can do to change the customer’s expectations single-handedly. It is an industry wide problem that has been created by a few in the industry who have the biggest margins to play with. Meanwhile the rest follow or flounder. Last year it was really only Amazon and Asda who promoted Black Friday. This year all the major retailers, and some independents, were counting down to chaos and giveaway prices.

Since then, the level of discount has been deepening by the week and the post-Christmas Sales are inching forward such that many retailer’s Sales will start online today. Those customers that waited, the customers that the retail industry fear, will be rewarded with some incredible bargains, thus encouraging them to wait again next year. Well done us.

Last year PriceWaterhouseCoopers reported 72% of the High Street running sales promotions in the week before Christmas with an average discount of 46%. It’s a pretty safe bet that those percentages will be higher this year.


Retail Remedy provides bespoke, results-focused consultancy for retailers globally, from established brands to high-growth start-ups. Get in touch.

What the M&S customer wants for Christmas

The Marks and Spencer customer, we are told, is a fashion conscious 50-something with her own income. Walking around a Marks and Spencer store however, doesn’t support that.

The M&S target customer has given up shopping there, disappointed that what she finds isn’t for her, evidenced by the continuing downturn of womenswear sales. This Christmas looks like it will be more of the same judging by a recent visit to its Fosse Park store, so what would we suggest M&S do to turn the tide?

Give clearly identifiable roles to in-house brands.

A typical M&S store carries multiple womenswear brands including Limited Edition, Per Una, Classics, Autograph, Indigo and M&S Collection and there could be a place for each of them if they didn’t overlap and tread on each other’s toes. This is synonymous with the identity crisis that M&S has experienced, not knowing which customer they want to serve and ultimately not serving anyone. An edit of the brands and a redefining of their roles would leave the customer with a clear reason to shop each brand and a place for each in her wardrobe.

Help the customer navigate the store with clearer signage.

Aligned with the confusing brand architecture is confusing signage and store layout. Brands blur from one into another leaving the customer disoriented and drifting aimlessly. While that can lead to accidental new discoveries, better to present the customer with what they wanted to and expected to find.

Better buying

Ranges can be disjointed with surprising garment adjacencies, limiting the opportunity for the customer to buy into a range. A clear and consistent interpretation of the design brief should be a given but it still feels that isn’t entirely on point. Add to that the range breadth that is allocated to smaller stores and the ability for a customer to buy an outfit is impeded.

Inspiration

Last on the customer’s Christmas list for M&S is an inspiring store environment that encourages her to buy, to browse and to come back again to see what is new. The store can just feel flat. Even this Christmas, the advertising promised magic and sparkle and it was well disguised behind a display of poinsettas.

So come on M&S, grant the customer her Christmas wishes and get M&S back on track.


Retail Remedy provides bespoke, results-focused consultancy for retailers globally, from established brands to high-growth start-ups. Get in touch.