The next 12 months will be like nothing we’ve seen before in Europe, particularly in the UK.
Brexit looms ever large on the horizon. Despite time running out, and the date for the UK to leave the EU now less than a year away, there have been no reported sightings of a clear consensus about what a post-Brexit UK – or European Union – will be like. Uncertainty can be contagious and as a consequence, confidence among businesses and consumers has become suppressed. There may have been signs of recovery but they have tended to be short-lived – far too temporary to indicate any kind of major turnaround.
In April 2018, the GfK index of UK consumer confidence fell back to -9, down from -7 for the previous month. Added to which, retail sales fell in the first quarter of 2018 and GDP growth for the same period was just 0.1%.
The picture in the Eurozone looks slightly rosier, but is far from impressive. The European Commission’s economic sentiment indicator remained unchanged in April, at 112.7 points. European consumer confidence is improving, but there’s a lack of uniformity of business confidence, with retail, construction and the service sectors lagging behind.
Investing in an uncertain climate
For some, it has been necessary to postpone investment decisions while there is so much uncertainty in the air. In the construction sector, it is common for developers to sit tight waiting for the right time to build. Vacant plots of land stay vacant until attractive margins can be squeezed from them. And while they’re vacant the only real cost they represent is the opportunity costs of not developing them.
But in retail, doing nothing is almost never an option. There is no escape from many of the pressures and challenges that require an investment-driven solution. Shoppers keep shopping. Costs keep accruing. Efficiency keeps being absolutely vital. Yet freeing up capital to invest in automation requires a belief that there will be a dividend from doing so.
There remains another area of uncertainty that is disproportionately relevant to retail logistics, and that concerns employment law. Last year saw a number of cases go to court involving gig economy workers fighting for employment rights. Quite often they won. But in Turin, six delivery riders for the Foodera business lost their case regarding alleged wrongful dismissal.
In January 2017, bicycle courier Maggie Dewhurst won an employment tribunal hearing against CitySprint over holiday pay entitlement. Ms Dewhurst, who is also vice-president of the Independent Workers of Great Britain, a trade union for those working in the gig economy, is one of the claimants in another action against CitySprint. This time £200,000 of unpaid holiday pay is being sought.
Knowing whether your workforce is entitled to holiday pay, sick pay and a whole host of other employee benefits is hugely important for forecasting and budgeting. Not knowing whether that status might change makes such forecasting almost impossible.
Many big-name delivery firms are embroiled in this kind of dispute over the employment status of their drivers and riders. Elsewhere in the sector, the status of people working in distribution centres and warehouses is also an area of contention. All of which makes those big decisions about significant infrastructure investment problematic.
Maybe what’s needed is a focus on getting the basics right – being able to provide good, consistent levels of service to retailers and shoppers alike.
Back to the future
In spring of this year, the BBC opened up its sound effects archive for public use. The archive contains more than 16,000 recordings of the most amazing and the most mundane sounds of everyday life. I searched for, and listened to, one in particular that immediately took me back to my childhood in the 1970s – the electric milk float, making its morning deliveries. So much has changed since then. But the sight and sound of an electric-powered vehicle making doorstep deliveries is something that could once again become a familiar sight.
From the DPD-owned Chronopost in France to UPS, electric delivery vehicles are back in fashion. Deutsche Post has a separate division for its StreetScooter electric vans, and even the mighty Tesla is getting in on the commercial vehicle act.
Is the only thing left to look forward to the past?
It’s easy, a little too easy in fact, to get nostalgic about the past. Although one thing is for certain – everything about retail was far simpler 40 years ago than it is now. But it’s shopper demands that have set the pace for the changing nature of retail and consequently fulfilment. People want more choice and lower prices, and as their tastes change they expect retailers to keep up with them. In London just 30 years ago, you’d have struggled to buy a ball of mozzarella – now, most supermarkets will offer you several choices.
You might not even like mozzarella, but at least now you can choose whether you have it or not. And the same is true of an array of other food and non-food items. Fast fashion, for example, dominates the garment category and wouldn’t be possible if all parts of the supply chain – from factory to doorstep – ran at the same speeds of 30 years ago. Another defining characteristic of fast fashion is the transient nature of the clothes – these are not long-term wardrobe investments, but short-term fabric fixes. They have to be cheap as well as freely available.
The crux of the challenge facing operations, delivery and logistics comes from striking a devilishly tricky balance. That is enabling retail to run at the same speed at customer expectations for choice and service on one hand, and doing so within implausibly tight financial constraints on the other.
To thine own self be true
Getting that balance right is where that back-to-basics outlook can really help. Unless you are in the position to make significant strategic investments you need to be absolutely laser-focused on resource deployment. Every asset within your operations empire needs to have every last scrap of latent value rinsed out of it.
That could mean forgoing any attempts at a great leap forward and focusing on making marginal improvements to what you do. Getting into same-day delivery could open up a whole new revenue stream for your company. Not just any old revenue either, but the premium kind. But it will also mean starting every day not knowing how busy the company will be, what the company will be called upon to deliver, or where operatives will be taking it. That’s not merely a new service offering – unless the business is already dabbling in same-day work, that’s a complete transition of how the business operates.
Be honest now, is that something your company can do? And is now the right time to do it? It might be that your answer would be yes to both question. But if you’re unsure, it would be far better to go back to basics, remind yourself of what made your business famous in the first place and focus on being more brilliant at it than ever before.
Survey after survey in recent years has pointed toward the two, sometimes competing, priorities of customer loyalty when it comes to retail delivery – cost and convenience. No one wants to pay for delivery. That’s a problem that harks back to a time when free delivery was a marketing tool. It’s now part of many shoppers’ purchasing DNA.
Everyone wants their purchases delivered at a time, and place, that suits them. That’s the only time shoppers are prepared to pay for delivery – when it’s clear the value they’re getting from it. It’s practically impossible to convince anyone you’re offering sufficient value from a service that you need to charge for it if you were once giving it away free. Even harder with the likes of Amazon breathing down everyone’s neck making it all look so easy as they segue from next-day to same-day to same-hour. And customers love them for it, while wondering what’s stopping everyone else from being able to do what Amazon does.
Keep the promises made to the customer. That’s the raison d’être of retail fulfilment. It’s something Amazon is good at. But others are good at it too. Often, keeping a promise boils down to the nature of the promise made. Maybe it’s time we all started to think of ourselves as the milkman of yesteryear. Methodical. Dependable. Uncomplicated. Part and parcel of everyday life. Fresh milk delivered daily was a simple promise that could always be kept. Was it sometimes taken for granted? Maybe a little. Was it appreciated, though? You better believe it.
This feature first appeared in the IREU Top500 Operations & Logistics Performance Dimension Report 2018. Click here to explore the Top500 series further.
Image: Wikimedia Commons
