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Evolving solutions to meet the peak trading challenge

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Evolving solutions to meet the peak trading challenge

  • Click & Collect “comes of age” & supports retail brand loyalty
  • Some retailers saw online hit 50% of all sales on key days
  • Returns likely to affect retailers well into late January
  • The rapid release of inventory from returns is vital to protect margin

 

Just because Christmas is over, doesn’t mean the retail supply chain can sit back and recover. Although we’re now well into the New Year, retailers and logistics companies are still processing deliveries, returns and orders, so we’re taking a look at the performance and trends of the recent peak trading period. At the same time, planning for peak 2017/18 begins, in earnest.

Every year, the ‘Boxing Day’ sales seem to arrive earlier, with some retailers emailing their databases on Christmas Eve to ‘warm up’ customers on the best way to spend Christmas money/gift cards. The truth is, for retailers and their service providers, peak trading has truly become a multi-day event. Whereas in the past, we’d see significant peaks for individual days – whether that be Black Friday, Boxing Day or the first working day of January – the retail sector has successfully applied some smoothing to these sales period spikes.

Customers continue to become more savvy too – often waiting until the last minute to make their purchases, even anecdotally delaying their present-giving to fit with the sales. It has become a competition over who blinks first.

This year’s peak trade period saw mixed fortunes for UK retailers. Predictably enough, online sales, and mobile sales in particular, performed well. Some suggested that this year would be the first where online would deliver a greater sales figure than some retail store estates on key days – something which is backed up by our data. If this figure is validated across the sector, it’s a huge milestone for retail and something that could create further opportunities and challenges.

High-street fortunes were mixed, but whereas we’ve seen something approaching a fire-sale from some retailers in previous Christmas peaks, developments were markedly more measured this time around, suggesting a more confident and pre-planned approach to sales strategy. This is only possible with a robust supply chain process in place.

Despite the varied performance of retailers, online shopping unsurprisingly, is something that grew in popularity, which in turn means a rise in demand for deliveries. This places significant pressure on retailers and the logistics solutions they have in place. This surge in the popularity of ordering online created some challenges, but non-food retailers, such as John Lewis, have become savvy to the problem and benefitted from Clipper’s new retail focussed click-and-collect solution, which performed admirably across peak, helping to lock-in customer loyalty. The success of Click & Collect overall is evidenced by our own data which showed outputs from some of our shared use retailer sites hitting over 65% of all orders being delivered by this channel – and our in-house data also suggests that the Click & Collect growth could be up by circa 18% year on year during the peak sales period.

If retailers have a flexible enough logistics solution, disappointment can be avoided, even at peak times. For example, Clipper worked with several retailers to extend the delivery order deadline for Christmas by a day or two to accommodate the amplified demand. The fluctuations in Click & Collect demand throughout our network highlighted that from an ‘average day in the peak’, to a ‘peak day in the peak period’ the variance was circa 117% in the run to Christmas.

One of the pleasing aspects of the new Clipper Click & Collect solution is the positive reaction from the store based retail teams. The solution has been developed to efficiently integrate with a retailer at the receiving store to provide a seamless end-customer experience, whilst minimising store administration/disruption. Equally pleasing is that fact that in its first real operational peak, the new network delivered  over 3 million parcels into retail store estates during the period . The customer take up is clearly evident and the increasing adoption of this channel is also helping to drive customer footfall into retail stores, with the obvious benefit of retail and customer interaction.

Delivery is not the only concern for retailers in terms of their logistics over peak trading. The Royal Mail dubbed the 3rd of January ‘Take Back Tuesday’, as they predicted it would be the busiest day for the return of online Christmas gift orders. The postal service forecasted a rise in returns of 50% on an average December day. This highlights the issue of the sheer volume of deliveries and in turn, returns that must be processed and transported. Returns are a challenge identified by Clipper some years ago, addressed by our Boomerang™ returns management solution, which is now streamlining the process and minimising risk for some of the UK’s biggest retailers.

The very real benefits of the Clipper Click & Collect solution and our Boomerang returns management capability lies in the fully integrated way in which the two solutions operate. The Click & Collect solution provides next day delivery, with late evening cut-offs, but also provides for customer returns to be collected from the store and delivered same day back into a Boomerang returns facility. The rapid release of inventory allows for the returning stock to be sold at the best margin, rather than missing the sales window. Rapid returns processing is also vital to ensure a positive customer experience and future loyalty.

The success of the new Clipper Click & Collect operation is also very pleasing when viewed against the findings of The 3rd Annual JDA/Centiro Christmas Customer Pulse report, which showed “78 per cent of UK adults online said they would switch to an alternative retailer when shopping online, due to a poor experience with ordering an item online at Christmas. Specifically, 76 per cent would switch to an alternative retailer because of a poor home delivery experience, 66 per cent due to a poor Click & Collect experience, 74 per cent as a result of a poor returns experience”. These figures highlight the real impact a reliable and smooth supply chain can have on customer retention.

In the few days before Christmas, Clipper witnessed activities within some of our sites which were over 25% ahead of forecast; despite this, we helped our customers to achieve their service proposition. Being able to maintain quality of service during periods of volatile high demand is extremely important and our ability to do this allowed us to keep our clients, and their customers satisfied.

Clipper developed its Boomerang™ and Click & Collect solutions to meet the exact needs of modern shoppers and their shopping activity. It is this flexibility, adaptability and efficiency which allowed our retail clients to extend their delivery order deadline and go above and beyond to satisfy the surge in customer demand in what could be considered as their busiest Click & Collect period to date.

Coping with the pressure of demand and in turn keeping your customers happy can be difficult, but it is of the utmost importance that you can perform, regardless of how intense your workload may be. As an innovative retail solutions provider, Clipper will continue to develop new solutions to meet the ever changing demands of retail and look forward with confidence to the challenges and opportunities of 2017.

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