Preparing for Retail Peak Season

There is no denying the impact the COVID-19 pandemic has had on all industries, and the retail sector is no exception. Consumer behaviour shifted dramatically in 2020, and the e-commerce space grew exponentially as people adapted to purchasing primarily online.??

By the end of 2022, it is expected that the UK will have nearly 60 million e-commerce users - leaving just a minority of the population as non-digital buyers. E-commerce has undeniably become the norm for shoppers everywhere in the UK so, as we approach this year’s retail peaks, it’s more important than ever that businesses have provisions in place for a successful peak period .

Many retailers I speak to are wondering what consumer behaviour will be like this 2022 holiday shopping season, as our 2021 reference point (when COVID restrictions were still in place), is unlikely to be a helpful guide. More recently we’ve also had the news of industrial action at Royal Mail to add into the mix. All of this makes planning for this year more tricky than usual.? However, there are many things we can still do to maximise sales, market share, customer experience and loyalty, whilst optimising operational efficiency as we enter peak and then 2023.

Here are my three top tips for meeting customer demand this peak season:

1. Taking Omni-channel to the next level

Whilst the e-commerce industry remains as prevalent as ever, it’s important not to forget those shoppers who still favour the high street buying experience. In fact, a recent study by Statista found that 82% of consumers in the UK would care at least a bit if their local high street disappeared.?

In order to meet customer demand, retailers must ensure alignment between their physical and online channels, if they are to fully benefit from the peak season and create a positive buying experience for customers.??

Retailers have been offering click-and-collect services for many years and these are very popular (projected to grow from €6.9bn in 2018 to €11.9bn by 2023 ) . However, some retailers have been taking this one step further and realising that their stores can in effect operate as localised distribution centres. For retailers with a high number of SKUs or broad assortment, or who have fast-moving stock (e.g. fashion or technology), making the in-store inventory (which can tie up millions in working capital) work harder for you is key.?

By turning your store into a distribution centre (Ship from Store), to offer a delivery service to your customer’s doorstep, you benefit from:

A. Offering customers a better experience and more options that make them more likely to shop from you - for example: same-day precise delivery or rapid (less than 2 hours), both of which can now be offered cost effectively in urban dense areas.??

For some product categories and urgent use cases (e.g. vital tech stolen/broken), you not only clearly differentiate from other retailers (including Amazon), but you will generate super loyalty by exceeding expectations. One of Stuart’s clients who offers this service consistently gets a Net Promoter Score of more than 70%.

By delivering on an urgent promise, you also make it more likely in future that those customers order other categories of goods from you, increasing customer lifetime value and therefore your overall profitability.?

Metapack’s 2022 Ecommerce Delivery Benchmark ?found that speed of delivery is the second most important factor (26.6%) for 77% of online shoppers, almost as important as the cost of delivery (27.4%).

B. Improving Operational Efficiency...with costs increasing everywhere it can be difficult to find efficiencies (especially when many of these costs are driven by wider economic forces). However, for the smart retailers there are still opportunities. When a customer orders an item that is not in the distribution centre, but in stock in their local store, why ship it back to the DC and then back out to the customer, just because the operational model demands a hub-and-spoke approach. Not only is this not a sustainable way to approach logistics (think “product miles”), but it is costly and places even more demands on the warehouse, which is unnecessary and already under a lot of pressure during peak season.

I’ve heard of an example of a product transferring from a store in say one part of the city to another e.g. from Kensington to Fulham via the Midlands DC in order to fulfil a customer order - this is not only mad but costly and not sustainable.

C. Mitigating the risk of expensive mark-downs for fast-moving assortments....Think of a customer looking for a specific size and colour of clothing online, where it’s not in stock in the DC, but there are items in the store network. Or where you have potential end-of-season surplus in store that you can merchandise through your on-line channel without marking down in store.? Some smart retailers are now using sustainable intra-city pickup and drop-off delivery services (for example within the M25 urban area) to fulfil customer demand directly from all the stores in that urban catchment.? This can be very cost effective, reduce expensive mark-downs and increase customer experience.

2. Your delivery partner is integral to your brand experience

Retailers are often spending millions of pounds constantly improving their eCommerce website experience.? Great effort and science goes into mapping out the optimum customer journey to the point of check-out and then it goes out to a 3rd party delivery partner.

It’s important to provide consumers with visibility at all times with precise live-tracking. According to Metapack’s 2022 Ecommerce Delivery Benchmark , 35.3% of UK shoppers say that lack of tracking leads to a bad experience. Therefore retailers must ensure they have this step of the process implemented successfully for a hassle-free delivery experience on both sides.

For many customers, the delivery and doorstep experience is the only physical touchpoint they have with your brand (especially for pure online retailers) and yet we hear stories of how this experience can let down the whole shopping experience which otherwise is excellent. Every week I see examples of people posting photos of someone’s front door on Next Door, the community website, and asking “does anyone recognise whose front door this is?? It’s not mine but the courier has just left my package in this safe place”!

Not only that but the customer then contacts you and the cost of putting things right is extremely high - the cost of that call, answering the emails, re-delivery and potentially giving a goodwill gesture. These costs quickly wipe out any profit and leave a customer likely to shop somewhere else. In peak season the last thing retailers need is more customer complaints to handle. As the old saying goes “a stitch in time saves nine” and this is very true.

That 50 pence your team saved on the unit delivery fee by selecting one delivery partner over another suddenly pales into insignificance when you add up the additional costs and lost future revenue. In today’s challenging trading environment, most retailers are refocusing on keeping their existing customers happy as opposed to spending to acquire new customers, so this becomes even more critical. As Warren Buffett once said: “Price is what you pay, value is what you get.”

Technology is reshaping delivery and new services are offering sophisticated B2B platforms that your own website or DC can link into directly, where you can take control of the end-to-end communications to the customer and let the delivery partner focus on being the best-in-class delivery operation.

Predictability and reliability are crucial factors when it comes to building customer trust. Retailers must take this into consideration in order to maximise on demand during the peak period and to increase customer satisfaction rates. With so many options in the space and new delivery options coming on stream, ensure you look again at your roster of delivery partners and consider adding new partners, rather than going to the same old list and trying to squeeze another 50 pence out of the delivery cost again.??

3. Start thinking about next year now and re-think sustainable options for 2023

Planning and preparation are key to a successful peak period. Last year, 9 billion pounds was spent during Black Friday, making it the biggest-ever sales day in history. This was an increase of 23% compared to 2020.?

In spite of peak season demands, I would encourage everyone to devote a little time (it can be only an hour or two) over the next 12? weeks by starting to investigate new offerings in the market (many of the ones I’ve already mentioned) and speaking to new delivery partners (not just the same old ones).?

A recent consumer survey by Yotpo found that 86% of UK respondents are more likely to be loyal to a brand that shares their values. When taking only Gen Z respondents into account, that number increases to 95.7%. One of the top values of consumers is sustainability which will continue to be of increased importance in the years to come. Consumers are particularly savvy; they don’t only look at what materials are used to manufacture products, but also the delivery methods used.?

It’s easy to write of sustainable options in a period of economic challenge, but sustainability is not necessarily an unaffordable trade-off, which is a common view I hear.? With record energy prices, being more sustainable can be good economics and these benefits can be passed on to the customer, as well as helping to differentiate your offering in the market.? Cities will continue to increase vehicle restrictions in urban areas with associated surcharges for non-sustainable transport types. In the past, many retailers have made “green” options a premium offering, but this does not necessarily have to be the case.?

Therefore, in order to help attract and retain customers, retailers should ensure they have sustainability built into their end-to-end processes and that these are clearly outlined to consumers throughout the customer journey.

Perhaps 2023 should be a year for trying newer services, such as rapid ship-from-store, local urban fulfilment, or making precise scheduled and sustainable services standard. Start small by being prepared to invest a few hours in the remainder of 2022 to investigate what’s possible so you can get ahead of the competition and create lasting customer loyalty which will be key in 2023.