Retailers are entering the busiest time of the year with Black Friday and Cyber Monday less than a month away – and Christmas fast approaching.
There is a lot of confidence in the retail sector, with online sales volumes in particular set to exceed all expectations. IMRG, the independent voice of the online retail industry reporting this week that online order volumes grew by almost 19% in September compared with the same month in 2014.
Andrew Starkey, head of e-logistics at IMRG was quoted:
“We know that major UK online retailers are anticipating strong growth over Q4, perhaps as much as 20 per cent year-on-year for the quarter. This will include upturns of circa 30 per cent or more over the super-peak days of Black Friday and Cyber Monday”.
That’s all very positive news for the retail sector, but according to the Road Haulage Association (RHA) a shortage of truck drivers could potentially lead to empty shelves come Christmas.
In a press release published on the RHA website, Richard Burnett, the RHA’s chief executive says:
“We are short of between 45,000 and 50,000 drivers and the situation is getting worse. Thousands of older drivers are leaving the industry and younger people can’t afford the £3,000 it costs to get a truck licence”. The RHA estimates that over 85% of all goods purchased in the UK ‘are carried by a truck at some stage in the supply chain. The road freight industry and its associated warehousing operations employ over 2.2 million people and is a vital part of the UK economy’.
Concerns about the ability of the logistics sector to cope with the ever increasing volumes of online retail and demands of customers are echoed by John Munnelly, head of operations at John Lewis who are widely regarded as the leading online retailer (online sales totalled £1.4 billion in 214).
In the Internet Retailer Dimension Report: Operations and Logistics, Munnelly says that ‘‘the carrier network is the Achilles heel of the industry. It’s under invested, yet customers expect more for less.’
During Black Friday last year, John Lewis reported 2.6 orders online per second alone. They, along with every other retailer is trying to access the same finite supply of drivers, vans, trucks and road space.
To help retailers cope with the inevitable peaks in the run up to Christmas, IMRG suggest three key considerations for managing logistics:
DEMAND CAN VARY
There will be a huge amount of variables that may well impact the size and scale of events such as Black Friday. Many observers are predicting that although order volumes will be high, the peaks might not be as pronounced as last year. Retailers may well, for example, offer discounts over a longer length of time this year.
NEXT DAY CAPACITY IS FINITE
During the run-up to Christmas, it might be increasingly difficult for retailers to maintain a blanket next day delivery policy. IMRG, recommends that retailers only offer guaranteed next delivery to premier customers, or for products where there is a genuine need for next day delivery. They suggest that ‘many consumers will be happy to opt for longer delivery lead times in order to get the discounts they want’.
VARYING THE DELIVERY PROMISE
Setting realistic promises and managing consumer expectations right from the start of the purchase process is particularly important during peak periods. Promising a certain delivery timeframe and then not being able to fulfil it can be extremely damaging to a retailer’s brand and cause undue pressure on customer services.