How British retailers beat Christmas geeks
Most of the products in the popular Soap and Glory gift set are made in the UK. But the delicate cans with cosmetics come from China, which poses a tricky logistical challenge for Boots.
The Nottingham-based retailer needs to bring the delayed 80,000 can orders into the UK and pack them in time to launch the product priced at £32 on December 3.
It eventually shipped them to South Korea and then airlifted them to the United Kingdom. The company also hired additional “assemblers” to make up for the time lost due to transportation issues, in order to combine this and other popular suits.
Such challenges are typical of one of the most unusual festivals in recent memory.Although stores are still open-unlike in 2020, non-essential retail Closed most of November — Retailers have been grappling with the bureaucracy of Brexit, global transportation disruptions, and shortages of warehouse workers and truck drivers.
Sebastian James, the managing director of Boots UK and Ireland, said that ensuring seasonal products arrive at the store is “an extraordinary effort”, including renting their own boats-Asda and John Lewis did the same- And dispatch headquarter employees to the store.
Another executive in the industry said, “There are many compromises… everyone is struggling with next day delivery and inventory.”
But the terrible predictions of a shortage of toys, imported turkeys and pigs in blankets failed to materialize. “Compared with last year, we have increased the number of turkeys this year, and they are all British,” said Asda, the third largest supermarket in the UK. “And there are a lot of pigs in the blanket.”
Grocers avoid potential distribution bottlenecks by hiring more drivers in the fall and delivering products with longer shelf lives (such as Christmas puddings and holiday drinks) to stores earlier than usual. This removed as much of the delivery capacity of fresh produce as possible in the 10 days before Christmas.
Non-food retailers focus on maintaining the availability of key product lines. “Our inventory this year has increased by 15% compared to last year,” said Alex Baldock, chief executive of electronics retailer Currys. “But we showed customers 100 large-screen TV options instead of 120.”
Many retailers began to prepare inventory for peak holiday trading earlier than usual. “It’s a great thing to be wise after the fact, but judging from our inventory situation, it is much better than some competitors,” said Simon Arora, CEO of variety discount store B&M.
The company requires Asian suppliers to ship early, and the first Christmas stock will arrive in August and September.
Andy Bond, CEO of Pepco, the owner of Poundland, said that sometimes there is a need to balance profitability and availability. “We have conducted arduous negotiations as usual, but if it means that we receive the goods within a reasonable time, we are not hovering over pricing.”
Scale helps a lot. Poundland has more than 800 stores in the UK. Halford dominates the cycle. Argos is the country’s largest toy retailer, and Currys is the market leader in electronic products.
“For our suppliers and our customers, we are first,” Baldock said.
This luxury is not suitable for Christow, a small online retailer of home and garden products, which faces major challenges in importing artificial Christmas trees.
“The origin of many of these trees in Vietnam is Fall into a severe lockdown, Which delayed the production date,” said Josh Piercy, director of e-commerce for the Devon-based company. “If everything else is perfect, then it’s fine. “
This is not the case. Transport delays and driver shortages in the UK have exacerbated the disruption in manufacturing.
“This means that our warehouse operations must be very flexible,” Piercy added. “If they can only deliver at two o’clock in the morning or on Saturday, then we will add another shift so that we can accept it.”
Christow also extended the lead time for pre-ordered goods by four weeks, a form of expectation management that is widely used elsewhere. Even John Lewis, who has a well-established online product, extended his standard delivery time to 10 days during Black Friday in case of emergency.
Shoppers help by buying early. According to data from the British Retail Association, in the four weeks ending November 27, total sales increased by 5% over the same period last year. According to Barclaycard, retail spending on payment cards increased by 16% in November, with sales of toys, gifts and jewellery being particularly active.
But keeping shelf inventory comes at a price.already have Increase the wage rate of HGV drivers, Amazon now provides more than £11 an hour for warehouse workers in many locations.
Sea freight is Significant increase year-on-year Stocking up in advance means more cash is taken up in inventory.
However, discounts in many industries are less.At this time last year, large chains such as Debenhams and Arcadia Will be liquidated And it is slashing prices to clear inventory. The BRC November store price index showed an average price increase of 0.3%, the highest level since May 2019.
The challenge will not end on December 25. For certain industries such as furniture, Boxing Day marks the beginning of one of the most important periods of the year.
Companies such as Made.com and DFS have issued warnings Extend delivery time Used for large items such as sofas. Their response was to move production closer to Europe and hold more inventory.
For others, plans for Christmas 2022 will begin at the end of January. Piercy pointed out that since the purchase agreement was reached this year, the price of raw materials has risen sharply, which will affect prices next year.
The global problems surrounding container freight are also unlikely to ease. Pepco’s Bond said: “We assume that the outage will continue throughout the next year.” “We don’t see these problems going away anytime soon.”