Protect your profits

Retail is a dynamic yet volatile business that has over recent years devoured many high street favourites, as well as small traders that failed to keep up with the constant pace of change. The fall out from the Global Financial Crisis is ebbing away and, according to a Verdict consumer report, economic factors have allowed consumers to increase their spend on discretionary purchases – driving footfall into clothing stores.

The consequence for retailers across all sectors is the considerable challenge of a highly competitive market juxtaposed with increasing customer expectations in terms of service and value. Add to this game-changing shifts in technology and its clear: the world of retail has changed.

Being the world’s leading eCommerce country, the UK is right at the cutting edge of this. Consultancy PWC predicts online sales will be 25 per cent of non-food in the UK by 2018. One of our growing habits is buying what we wear online. The latest British Retail Consortium and KPMG Online Retail Sales Monitor indicates clothing sales saw their highest growth since Christmas in May, while Javelin research suggests that within ten years, sales conducted online within fashion retail could reach 25 per cent.

But eCommerce today is just one part of a retail picture where the balance of power has shifted towards the customer. Consumers expect to gain the same shopping experience no matter which channel they buy through. Efficient, cost effective and agile logistics will be the key for those who wish to prosper in this new retail world order, and that means automation.

Automated logistics solutions that keep costs down and margins up are vital for maintaining a competitive supply chain edge - particularly in the multichannel fashion retail sector. Designed correctly these systems can help operations adjust, not only to seasonal changes – of which there are some 14 mini seasons brought about by ‘fast fashion’– but also changes in growth rates. The time to contemplate is running out - retailers already investing will be ahead of the game.

SDI Group for example, recently helped TNT Fashion Logistics double its current sortation capacity at its facility at Bergen op Zoom in West-Brabant, The Netherlands, by installing an exact copy of its existing FSU (Flexible Sortation Unit) sorter right above it, on a mezzanine. Terry Norman, Development Director at TNT Fashion Group, says: "Although we do not need this capacity for 3 years, TNT is investing heavily and early because it is vital to have capacity on hand for when the volatile retail market needs it.” This installation future proofs TNT’s operation, allowing peaks to be met for years to come. When desired in the future, TNT can activate the sorter’s split chutes, which will double the amount of available chutes and drop locations currently available. Terry adds: "This means that we are flexible enough to respond quickly to any change in the demand pattern from retail stores or the direct channel.”

Patterns are changing as consumers want faster deliveries as well as convenience. Retailers’ logistics operations need to deal with this demand as well as facilitating a competitive returns policy.

Innovation in automated systems can help here too. A good example is SDI’s MonaLisa hanging pouch sortation system. Allowing sortation of both hanging items and flat goods simultaneously, it means multichannel fashion retailers can combine several elements of an order. Its high speed makes both picked and returned product available to be sent out later in the picking window, which will particularly interest eCommerce retailers.

Given how hard earned margin is, any innovation in the logistics operation can have a significant positive impact. Take the case of the ‘world’s first’ automated ‘Hanger Sorter’ system for recycling empty coat hangers used extensively by the fashion sector. Developed by SDI for one of Europe’s largest fashion chains, this innovative solution deploys ground-breaking camera technology to identify a hanger from over 80 different profiles in under 300 milliseconds - whilst on the fly. This can revolutionise the highly labour intensive operation of sorting empty hangers returned from high street retail outlets. It is more than twice as fast as a manual sorting process - bringing significant operational benefits, along with cost and space savings.

Retailers that fail to invest in automated systems that can accommodate volume growth, provide the innovation to reduce costs, offer agility to meet trends and mitigate risk to ensure smooth supply chain flow can be sure of one thing: they will struggle to compete with those who have.