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IREU Top500 The Customer Report: 2018

IREU Top500 The Customer Report: 2018

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John Lewis: Collaborating for click and collect efficiencies

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Dino Rocos, Operations Director, John Lewis spoke to Emma Herrod about the retailers’ Clicklink click and collect network and how it’s advocating collaboration across the retail industry.

As shoppers were wrapping the last of their Christmas presents on Christmas Eve 2014, the retail and carrier industries were rocked by the news that carrier City Link had ceased trading. With employees, contractors and self-employed drivers facing a bleak Christmas, for the retailers that had contracts with City Link the future was uncertain too. John Lewis had contracted all of its click and collect parcel deliveries to City Link with the company handling an increasing number of parcels for delivery to the Waitrose supermarket stores.

With shoppers increasingly looking for convenience – including more frequent, but smaller grocery shops – click and collect had been growing for John Lewis, explains Dino Rocos, Operations Director, John Lewis. Today, some 40% of John Lewis’s orders are made online with the majority collected from store. Of those click and collect orders, 73% are collected from one of 316 Waitrose stores as shoppers combine picking up their purchase with a regular visit to Waitrose. “That makes click and collect important to us,” says Rocos – especially since it also drives incremental sales. However, as he points out, click and collect “is also more expensive than customers calling into our shops and putting the item into a carrier bag and taking it away with them”.

Following the demise of City Link, John Lewis was left with the option of moving its click and collect business to another carrier or, working on the premise that it had sufficient parcel volume, build a network itself. Moving to another carrier would mean putting a significant proportion of its online sales in the hands of someone else while not retaining control. Building its own network would mean that it kept control, but the set up would be very costly. John Lewis understood that the business was not alone in asking questions around the growth of click and collect and control versus cost. Other retailers would also reach the same point in their own omnichannel journey.

Rocos explains that looking at the issue differently, John Lewis realised that it could create a solution not just for its own retail parcels but one which would work for the broader retail industry too. This led to the formation of a 50:50 joint venture with Clipper to develop a separate network to handle click and collect parcels.

CLICKLINK



The resulting Clicklink venture utilises Clipper’s vehicles to collect orders from John Lewis’s distribution centres along with utilising the retailers’ expertise in warehouse management and in-store operations and systems to provide a cost-effective sortation and delivery service that guarantees click and collect orders placed by 9pm will be delivered to stores before noon the next day. Clicklink has set up dedicated sortation facilities in Swadlincote and Northampton as well as developing a complete in-store pick up drop off (PUDO) solution for other retailers to utilise. This includes software, hand-held scanners, parcel tracking from receipt through to the cage being delivered to the individual store and systems integration. Parcel tracking can also be opened up to a retailer’s customers so that they can monitor their own order. The network also handles returns from stores and these can be sent back either to a retailer’s DC or fast-tracked to a re-pack fulfilment station and delivered into a store the next day.

As Rocos points out, customers aren’t concerned about which carrier or type of vehicle moves their purchase from a DC to the store; they simply care about the overall experience and what happens at the point of collection in-store. Clicklink has been fully operational since the second half of 2016, following an initial trial at the end of 2015 and roll out of service across the Waitrose estate. At peak 2016, up to 80,000 parcels were delivered by the service to Waitrose stores each day. Rocos points out that this figure rises to “well over 100,000” when volume to John Lewis stores is included. Clicklink also provides click and collect services to other retailers taking product from DCs to their own stores. During 2017, Whistles , Mint Velvet , Go outdoors , LK Bennet and Ted Baker started to utilise the service. “We’ve launched the service with John Lewis as the base volume. We have other suppliers on there and as a result we’re starting to share capability and drive efficiencies into the fulfilment of click and collect orders not just for ourselves but for other retailers as well,” says Rocos.

The service also means that a retailer which only replenishes store stock once or twice a week can move from not offering a click and collect service to very easily having multiple deliveries to its stores every day. The service is also scalable as volumes increase.

COLLABORATION & EFFICIENCY



Rocos believes that shoppers will continue to look for convenience and speed in their delivery choices and a dedicated click and collect network will provide greater agility and flexibility than one which is shared with home delivery. Click and collect will need to operate faster than a 24-hour cycle with collections 12 or even 8 hours after an order has been placed becoming the norm. Shoppers will expect to place an order in the evening and pick it up on their way to work or place an order in the morning and collect the parcel on the journey home. However, in order to do this sortation equipment has to work with click and collect multiple times a day and it won’t be able to do this when it is integrated with other fulfilment activity, he explains. He highlights that changes in retailing are making the supply chain much more complex than it has been in the past and that many retailers are facing the same issues. “The real question,” he says, “is should we continue to operate in isolation from each other in all that we do or should we be working more collaboratively in those areas where we don’t differentiate to get some efficiencies of scale?” He believes that retailing will have to move to a place where it’s delivering what customers want but in a very efficient way.

This could, for example, mean parcel consolidation or customers being able to collect their parcels from a number of retailers at a single retailer’s store. Retailers which are part of the Clicklink network would be able to do this – since parcels move through the same sortation facility before delivery to store – if they had the conversation and decided it was a business model they’d like to pursue. Rocos says that Clicklink is an enabler for collaborative working but he believes that there are also other areas outside of click and collect fulfilment where retailers could collaborate with greater volume driving greater efficiencies and cost savings. “As retailers grow more volume online and grow more volume on click and collect and incur the costs associated with that more complex customer journey we’ll see more asking if there are smarter ways of working.” He believes that there are gains to be made in areas such as transport, order processing, warehousing, pack and wrap and that great efficiencies can be made by increased scale. He asks: “If there is shared need and a shared service commitment why wouldn’t we try to gain some economies of scale?”

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