Retail Technology Show 2023: 5 things we learned about delivery and fulfilment

The annual Retail Technology Show covers all things retail, but a focus on the evolution of fulfilment and returns meant retail logistics stood out as a hot topic.

Carriers will deprioritise returns for retailers unless ordered not to. Customers are potentially more sensitive to the cost of delivery going up than they are to overall rises in the price of products. And speed is of the essence when it comes to fulfilment and last-mile logistics.

These were just three key insights from senior retail leaders speaking at the Retail Technology Show. So much great stuff came out of the conferences and chats on the exhibition floor, so we’ve summarised the five things we learned about delivery and fulfilment at the show.

Customers want convenience and choice

It’s not rocket science, but the statement that customers want convenience and choice when it comes to online delivery was reiterated by many retailers.

By choice, retailers mean product, delivery method, and time slots. And this must be done economically, as Chris Conway, e-commerce director at Co-op, explained to delegates on day one of the show. Talking about growth in e-commerce over the last few years, he said: “We have opened up choice, and competitors have done it too, and it means we have seen penetration increase.” He said that online retail at Co-op jumped from 7% of total sales to 14% during the Covid crisis, with the post-pandemic percentage currently settling at 12%. “The more convenience and choice you offer, the more people will do it but if you can’t do it economically then you’re not going to be around for long.”

Conway said it is an ongoing process to keep online retail efficient, so the supermarket chain continues to monitor product prices and the additional fees related to logistics. It has settled on a £15 minimum online order and delivery fees start at 99p. He added: “People are much more elastic on delivery charge than price. “You can put 5% on price and you see very little change. You put your delivery charge up 50p and you see a huge drop-off.”

It all goes to show that the last mile in retail is an essential part of the supply chain – it needs to be well thought through and with customer convenience and operational efficiency in mind. In many cases, it is the most expensive leg of the product fulfilment journey for a retailer, so it was encouraging to see many retailers visiting the show explore how our outdoor locker or instore locker proposition can help them save money in this area.

Returns remain an industry headache

It’s not so much a major problem for the food retailers, but elsewhere – particularly in fashion – managing returns volume is a key industry challenge. So many of the retailers at Retail Technology Show talked about it.

We heard how several retailers are exploring the use of returns management systems. And according to Kevin Davis, former head of logistics at Marks & Spencer, existing disparate systems can make the returns process very costly for retailers. He called for more connectivity between retail departments in relation to returns and suggested there could be benefits of developing a separate stream for returns to ensure this process can be optimised and costs kept to a minimum. “Returns often touch every single business unit,” he explained. “How you manage the handling and efficiency is so complex. And it gets swept under the carpet. You think returns policy is costing £10 million but it’s actually costing £70 million.”

Davis suggested returns can get deprioritised by carriers at peak trading periods, but he argues it is up to retailers to not let this happen and to manage this closely. The key reasons why? Because it makes sense economically but also because there is so much sensitivity around this area from a customer point of view. “If you look at NPS scores, you’ll get some of the most vocal customers on a poor returns experience,” he said, adding in challenging economic times customers want to know when they are getting their refund and they don’t want to wait weeks on end.

Retailers are on an efficiency drive

From Co-op to Boohoo, and from B&Q to boxed wine delivery service Laylo – all of which were represented on the conference agenda – it is clear efficiency is the aim of the game now in retail.

Retailers, perhaps more so than ever, are looking for ways to reduce costs and avoid wastage in the supply chain. All the while they need to deliver on their promises to consumers, so it entails getting close to the data and acting on insights. Amy McNamara, head of operations at Boohoo, said it is important to comb through your existing supply chain operations to find efficiencies wherever you can. “The key is to stay curious and ask lots of questions,” she noted, saying that Boohoo is using supply chain insights data much more in recent years to tweak and tighten operations – “looking at what’s available and utilising it”. “Recently we got a forecast of returns from carriers. There’s lots of organisations that don’t look at the data already available to them and it’s a lot more convenient than going out and integrating systems across the supply chain.”

Stores can be central to online logistics

Co-op’s Conway talked up the benefits of click & collect, suggesting Co-op is currently incentivising shoppers to pick up goods in-store because it is more cost-efficient for the business. But it can also be more convenient for customers on the move. He suggested Co-op’s store estate has been a key part of the retailer’s initial e-commerce success, which only launched in 2019. The website and all its listings on food delivery partner platforms contain real-time store stock levels, providing customer certainty at the online checkout. “Availability is key and delivery on time is key – it’s as simple as that,” Conway noted.

B&Q’s technology director Lynn Beattie said a key concern for all in modern retail is “How do you optimise fulfilment?”. “By leveraging our stores we don’t have to buy fulfilment capacity, and it allows us to pivot quickly,” she explained, reflecting on B&Q’s evolution over the last three years to add its stores to its online delivery network when before fulfilment was restricted to distribution centres.

More and more retailers are using their stores as hubs for their e-commerce operations.

More supply chain collaboration required

Julian Burnett, former tech boss at John Lewis and ex-supply chain transformation lead at House of Fraser, summed up the logistics sessions at Retail Technology Show. There’s a need for “increasing control through communication, transparency, visibility, and tracking”, he argued, adding that comms and collaboration are “absolutely central” to making the improvements the industry needs to position itself for future growth. “We’ve got to do better to come together as an industry at large, to work out some of these issues.”

With Burnett’s comments in mind, we at Parcel Pending by Quadient believe we are helping the industry come together while also providing the data-driven solutions and customer convenience that are evidently in demand.

Our unique parcel pick-up, and drop-off proposition allows retailers the flexibility to add another option to their online delivery menu, it gives all the major carriers a chance to extend their service offering, and it provides customers with a convenient way to collect their e-commerce orders while on the move.

We believe we have some of the solutions to alleviate many of the pinch points retailers are experiencing, including another way to manage the growing problem of returns. We also can drive incremental traffic into their stores – if a customer comes to collect an online parcel from a locker, the chances are they may pick up additional goods from the shop.

We stand out in the way our locker network is tuned into all the major carriers and offers best-in-class tracking, and we feel confident that this is a step towards the transparency and collaboration in the industry that is so needed to drive last-mile logistics success.

To learn how Parcel Pending by Quadient can support your retail business, get in contact here for a completely free consultation.