Kings of collection: The top 10 retailers redefining delivery

Collectively, UK ecommerce spending rose by 11% to £114bn in 2015, and speed and convenience of delivery played a defining role in which retailers benefitted most from this growth. Retail Connections polled 1,000 UK shoppers to find out which retailers are getting their fulfilment strategy right.

Interestingly, none of the retailers mentioned are e-commerce only; missing from the list are big pure-play brands like Amazon and ASOS. But with half of UK customer (58%) say that click-and-collect encourages them to visit stores more frequently, it is perhaps not surprising that shoppers prefer retailers investing in this strategy.

In the second part of our top 10 retail fulfilment countdown, we’ve analysed the top three retailer delivery services – as voted by the customer – and reveal why their strategies are rethinking delivery. Missed numbers 10-4?  You can catch up here.

3.  M&S

  • 2% of sales are online
  • More than half of online orders are collected in-store
  • Free in-store collection to 100 of its Simply Food outlets in travel locations

M&S, suffered problems with its website and distribution centre in 2014 and, as a result, Christmas 2014-15 saw a drop in online sales of nearly six percent at a time when the industry more widely viewed e-commerce as the future of retail. Looking at these problems the company redefined its strategy, emphasising the convenience of click and collect across all stores.

Aligned with this, M&S is revamping its delivery, warehouses and packaging as a part of its ‘unique Plan A’. Working with Accenture, DPD Express Parcel Delivery and Woodway packaging, it is rethinking how to design and operate stores, warehouses and transport fleets in the UK and Republic of Ireland to increase efficiency and reduce waste by more than a third.

2.  Next

  • Extended next day delivery cut off to 12am in 2015
  • 9% of orders placed between 10pm and midnight
  • NEXT Directory (online and catalogue) represents 40% of total sales
  • Over the last ten years, NEXT Directory’s sales have grown by more than 150%

Next is a delivery pioneer; in 1993 it launched a unique strategy of “One Brand; Two Ways of Shopping”, bringing together retail and home shopping formats. Then, in 1999 it announced the availability of shopping on the internet, following it up with next day delivery in 2000. By 2013, Next was trading online in more than 70 countries worldwide.

Most recently, Next announced it was extending next delivery next day deadline to midnight and will guarantee a 2 hour window of delivery. This strategy is a real differentiator for the retailer, with its closest competitors only guaranteeing orders to 10pm, and is part of the reason it rates so highly with shoppers.

Next’s ecommerce growth has also reaped benefits for its store offering. Through efficient stock management and customer service opportunities (such as handling Directory collections and returns in-store) the Group has been able to successfully develop both parts of the business. Looking ahead, it is developing next day delivery service in Europe based on the UK delivery infrastructure – first in Germany, France, and Ireland. Following encouraging sales, Next will extend this service to other close European countries.

1.  John Lewis

  • Recently extended delivery to 7-days
  • 36% of total sales were online in 2015 (32% in 2014)
  • 56% of online sales fulfilled via click-and-collect over Christmas 2015
  • 60% of customer pick-ups are via Waitrose

As part of a near pre-tax profit announcement, John Lewis revealed that delivery is at the forefront of the plan to drive profit recovery. In 2016, the department store chain is moving its services to 7-day delivery, driven by the “need to reflect how and when our customers are shopping with us”. In the words of Managing Director, Andy Street, “customers increasingly want flexible shopping and delivery times”.

In response to customer demands for omnichannel retailing, the department store has undergone a rigorous review of personnel, systems and infrastructure. For example, merchandising now work closely with operations to localise products and stock replenishment passes direct from delivery to shop floor – bypassing the outdated stock room scenario.

John Lewis believes its success stems from drawing on a single stock pool for both store and ecommerce fulfilment channels with different product types held in each of 8 DCs in different locations. As a result, the largest site, Magna Park, handles 75,000-85,000 orders a day for delivery direct to customers or to store for collection, as well as the orders replenishing its estate of 43 stores. At peak periods, including Black Friday, 180,000 customer orders are processed each day.

In July 2015 John Lewis announced it would start charging for click and collect orders under £30, which currently account for less than 18% of all orders. With other retailers including Tesco following suit, it will be interesting to see if the charge, a nominal £2, impacts fulfilment satisfaction. The retailer’s statement made it clear that it will help make the service “more sustainable. At the moment, huge costs are [being incurred], not just for the retailers, but also all these logistics companies”.

So there we have it – do you agree with the top 10? Share your views with us on Twitter, @FWRetailConnect.

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