It’s July, a football tournament is coming to a close and the EU referendum results are in – so it might seem slightly illogical to shift the focus onto Christmas. But this is retail, writes Andy Mulcahy, editor at IMRG.
The Christmas period has always been the key time for retailers as a whole, but the emergence of Black Friday as a major force has introduced a ‘new format’ of peak – where the bulk of sales activity has been condensed into a far shorter timeframe than was previously the case.
The impact on operations was clear to see in 2014, when the sheer size and scale of Black Friday far exceeded all expectations and put immense pressure on fulfilment services. Generally speaking, the performance was far better in 2015 – as industry had a precedent to work from and marketing campaigns were extended over a longer period, easing the pressure on operations.
However – this is no time to get complacent and assume everything will be fine during peak 2016. We have already seen the Black Friday period evolve quite sharply over the past few years and there is every chance we will see further change this year.
After months of research and speaking to people right across industry, we recently published a peak preview report with Salmon to share our findings.
On the logistics side specifically, there are three areas where we may see an enhanced focus from some retailers this year – click & collect, returns and delivery services.
It’s no secret that click & collect has become a key fulfilment option in the UK – we tracked total orders completed using this service option for multichannel retailers at 22.5% in 2015.
It of course only appeals as an option for shoppers if the store network provides a convenient collection point, but at Christmas the opportunity to get something delivered to a neutral point (as opposed to home where the eventual intended recipient may accidently sign for it, thus potentially spoiling the surprise if the order is a gift) may be heightened. In addition, shoppers may be spending more time in the high street in the lead-up to Christmas so ‘trip-chaining click & collect’ becomes more attractive. Some companies also put restrictions on allowing employees to get orders delivered to their office, again increasing the appeal of click & collect services.
It’s not just about shopper convenience though – it can enable retailers to consolidate multiple orders for delivery to stores, although there may be limitations around capacity at some stores so caution is advised to avoid frustrating shoppers by promising something that cannot actually be fulfilled.
The ability to return an unwanted item is important to shoppers. So much so, in fact, that a snapshot survey we ran with Toluna found that 10% regard it as the most important consideration when making a purchase – yes, actually ahead of price and product quality.
To further quantify this point, a survey we ran with Blackbay earlier this year found that 74% regard a good returns service important when selecting who they shop with – yet only 61% say they are satisfied with the returns service they currently receive.
During peak websites can receive huge volumes of traffic and retailers look to optimise their sites wherever possible to ensure performance is maintained – removing any unnecessary ‘bells and whistles’, reducing image sizes etc. Distractions around the checkout are also usually minimised, but it is increasingly becoming the case that failure to clearly signpost where shoppers can get information on returns processes could put up barriers to purchase.
With such a significant upturn in ordering volumes over the Black Friday period, the type of delivery service shoppers select can potentially impact performance.
For example – next-day delivery is a key element of the customer promise for some retailers, yet during peak capacity would be severely stretched if it is overused across the industry. During peak 2015 this seems to have been handled well, with many shoppers apparently happy to use longer economy services, backed up by click & collect, as there is still plenty of time left before Christmas.
Be that as it may, we did see a few major retailers launch same-day delivery in 2015 and, while not everyone has the distribution set-up to do so easily, we have started to create same-day expectation in shoppers’ minds which puts pressure on other retailers to follow suite.
It’s certainly an area to watch.