In the search for growth!
The recent ‘surpise’ rise in employment in the US has highlighted the problems of finding growth areas in the UK economy. How can employers in the logistics sector help to ‘stimulate the recovery’ by taking people on.
Retail sales over Christmas and January have not been too encouraging but there is one area where the logistics sector has been doing ’its bit’. This is in the area of home delivery. Recent research by independent logistics consultancy Logistics Support Services has shown that home deliveries grew from 21% of sales in 2010 to 35% in 2011. This was set against a background of 4-5% reduced overall demand with discounting averaging 37% by value across all non-food sectors. With returns expected to be up to 30% in some areas cash flow in January could be an issue for some retailers but it is an encouraging trend all the same..
The news from the logistics providers servicing this boom in home delivery is universally encouraging Hurrah! At last something we can shout about. LSS has identified what actually happened on the ground.
Yodel delivered 20 million parcels during the Christmas period with a 99.9% accuracy. Only 3100 parcels were still left in the network on Christmas Day. Not so good for these customers But the bashing Yodel took on Radio 4’s You and Yours Consumer Programme seems somewhat unbalanced. As an industry we just seem to take it on the chin!
This was not an isolated incident. City Link saw volumes rise by 8% in week 51 on over 20,000 van routes. Hermes delivered 15 million items in December, a 40% increase on last year with internet sales breaking all records. DHL also reported a 20% increase in imports and exports through their network and still achieved their highest on time delivery performance. Nightline delivered 1 million consignments between UK and Ireland and increase on 10% and Sameday City Sprint enjoyed their busiest day ever on 16 December. So is this just a seasonal blip or a fundamental change in shopping habits.
There are still some people who do not have email and don’t text. Harry Redknapp manager of Tottenham Hotspurs speaking at his recent trial is a good example of us older folk. But I bet you his son Jamie and his son Charlie tweet, are on facebook, have mobile phones, ipads, Xboxes, where ordering online is a very natural extension of this communication revolution. These new type of customers want the product when they want it, usually next day or even same day. Failure to deliver is not an option as they will find someone who can!
Internet shopping is a trend that will continue to grow as it also opens up markets to local products – the Lancashire Cheesemaker- to global customers. Specialist etailers such as ASOS have experienced exponential and continued growth over several years. Most high street retailers now have catalogue and e offerings and multi-channel retailing is here to stay. Out of town retail parks continue to develop with catalogue internet shopping being a logical development of this trend.
These changes in shopping habits create massive challenges for home delivery. Full load deliveries to high street stores from a DC is a piece of cake compared with delivering profitably one parcel to one of 27 million homes anywhere in the UK. The key issues for home delivery companies to keep costs down are: Making sure someone is in first time of delivery; how to pass on the cost of home delivery to the customer; making sure fulfilment centres can cope with peak volumes and not flooding our streets with half empty vans.
From the Christmas delivery figures, we seem to be meeting the challenge but this will require developing more fulfilment centres, changing stock and inventory patterns and developing more innovative delivery solutions such as the Bybox and DXBusiness Direct ‘drop box’ models. It will also mean the need for more trained staff. The hub and spoke parcel and pallet networks seem well placed to take advantage of this home delivery surge.
It would be great to hear on the national news headlines Logistics Industry takes on 10,000 new employees to deal with growth in home delivery. I suspect it is happening but we are not good at telling people good news. We just seem to sit back and get a bashing from consumer programmes when things go wrong. And they always will!