Retailer fulfilment ‘on steroids’ for online Christmas

Marks & Spencer has hired almost 1,000 additional staff at its online distribution centre in Castle Donington to match the expected jump in online orders over the Christmas period. The retailer has installed two new “auto-bagger” machines, each able to pack 2,000 items an hour, and the distribution centre is set to dispatch 50% more parcels this festive season than last year.

In October, the British Retail Consortium launched a national advertising campaign calling on consumers to start their Christmas shopping early to help spread out the demand during the coronavirus pandemic.

Marks & Spencer has hired almost 1,000 additional staff at its online distribution centre in Castle Donington

John Lewis & Partners executive director Pippa Wicks reported “lots of early buying of gift product”: “People are bringing forward buying for Christmas because they want to make sure they can get it. Certainly, it’s going to be an online Christmas. We are running at 60% [of total sales from online] and expect that to go up a bit. We’re putting our click-and-collect capability on steroids because that can be really helpful for customers.”

Nick Beighton, chief executive of Asos, said the production hiatus during the Covid-19 lockdown earlier this year is affecting stock levels for peak: “There has been an air pocket of product that just wasn’t made with up to three months of no production.

"On top of that, lockdown categories such as casualwear and sportswear have seen increased demand, and so some of that production just hasn’t caught up.

“There is a very, very tight supply. It means we [as an industry] are short on product. We don’t expect that to correct itself until spring next year at the earliest", Nick Beighton, chief executive of Asos.

The managing director of one multichannel high street chain told Drapers peak trading could be “pretty fraught” as retailers battle to meet increased delivery demand.

“Capacity is going to be limited [across the UK for delivery], and as retailers you have to be realistic. You have got a duty of care to try to manage people’s expectations. Even if it is to be a mediocre Black Friday [and Christmas], you could sell 20% less but it could be 30%-40% more digital.

“You have to be dynamic. If you’ve got a certain capacity with a carrier for guaranteed next-day delivery, you have to make sure you don’t oversell that [to customers]. You’ve got to be able to universally turn off next-day or guaranteed delivery [as an option], and tailor your delivery expectations so that there is wriggle room.”

Thomas Beahon, co-founder of premium activewear brand Castore, agreed that flexibility is key: “We have distribution centres in all of our key markets that allow 24-to-48-hour deliveries almost anywhere in the world, and are able to scale up operations on a highly flexible basis.

“The best distribution partners have acted quickly and decisively to increase capacity during lockdown in anticipation of the accelerating digitisation of the retail sector. Most of our partners have increased headcount by 20%-30% since March to deal with the expected demand increases.”

Denise Hamilton, chief corporate affairs officer at luxury kidswear etailer Childrensalon, told Drapers: “We have upgraded the capacity for our warehouse systems to allow for orders to be picked even more rapidly and ensured there is enough staff to be able to support our Christmas orders to make sure all are dispatched timely. Our extended opening hours until 2am on weekdays and 10pm on weekends will help us fulfil any additional orders, as well as give extra customer support.

"We also opened our Christmas shop earlier this year, to allow our customers more time to shop.”

To match the expected surge in demand for online shopping over the festive period, Royal Mail will hire 33,000 additional temporary workers to bolster its 90,000 strong workforce.

Tony Mannix, chief executive of logistics firm Clipper, said the distribution sector is making fleet and staff increases for peak: “The challenge for most retailers is forecasting levels of activity when usual benchmarks and historical norms do not apply. High online sales volumes put pressure on fulfilment, and it is essential that retailers have considered how to create resilience [in the supply chain].

"The risk of the virus infecting a team at peak cannot be overlooked, so well-designed back-up plans are essential.”

Carl Lyon, chief operating officer of Hermes, added: “The key consideration for retailers is how out of home solutions [such as collection points and locker deliveries] can be utilised to expand options for customers, and to create flexibility around the peak period.”

Lyon told Drapers that the logistics provider experienced five years’ growth in five months earlier this year.

“We have added four new hubs, 1,000 more peak trailers, eight depots, 100 delivery units and 10,5000 people, plus 1,000 more pick-up and drop-off locations. We’re prepared for 3.5 million parcels per day going through the network, which is a large increase on last year’s peak [trading period].

“While it’s clear that demand has increased significantly, it’s crucial that supply chains are constantly assessing the scenarios of demand, and how they are setting up their supply chain to have certain levers that, if required, can be used to deal with the peaks and troughs of the uncertainty."

Another challenge is the uncertainty of the levels of online growth over the peak period, warned Anthony Brimelow, commercial director at packaging specialist Duo: “The growth our customers are expecting is unpredictable. We will see spikes in online traffic at different times, and in different geographical areas of the UK where lockdown restrictions are tighter, and therefore more people are likely to be at home.

“Some of our retail customers booked production space as early as June. We’ve increased stock holding for our customers and invested in the expansion of our headquarters to accommodate new equipment, recruited new staff and introduced new shift patterns to ensure maximum output.

"We’ve also invested in large than normal stock holding for customers in distribution sites in Germany, US, China and Australia to mitigate risk where possible.”

Article courtesy of Drapers here