The Retailer Autumn Edition 2021

AUTUMN 2021

THE FUTURE OF RETAIL

FINANCE & PAYMENTS

SUSTAINABILITY

RETAIL SOLUTIONS

In-store experience is key to bring shoppers back to physical retail

Many UK retailers are overlooking the importance of the timely processing of refunds

Green Claims Code: Getting environmental marketing right for consumers

Is there a solution to the challenges faced by the retail industry in the run up to Christmas?

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WHAT COULD A LOW-CARBON RETAIL FUTURE LOOK LIKE?

Helen Dickinson OBE Chief Executive British Retail Consortium

While COP26 may be behind us, it is vital that we continue to build the low-carbon retail industry of tomorrow. Imagine a future where the environmental impact of every purchase is calculated and scored for us. A future where our receipt offers us not only the financial cost of our purchases, but its carbon footprint as well. Could we reach a place where we all refill our wine bottles instead of buying a new one? Where we recycle our old clothes along with our glass bottles? Where we repair our broken-down electronics rather than replace them? Where waste is frowned upon and packaging is shunned? We’re not there yet, but retailers are already exploring many of these ideas, trialling refill zones, drone delivery, deposit return schemes and more. The speed of change in the retail industry remains breakneck, but it is essential that we guide this change to support a more sustainable lifestyle. Since 2020, over 70 leading retailers have come together under the banner of the BRC’s Climate Action Roadmap, which aims to make the retail industry, including its supply chains, carbon neu - tral by 2040. Given retail accounts for over 30% of all carbon emissions in the UK, there is both a huge opportunity and massive responsibility on the industry to act. It will need action from suppliers, retailers, and customers working in partnership. Customers want brands to help them live sustainably. They expect retailers to help guide them on the path to living a low carbon lifestyle, but many believe brands make it harder, not easier. This is why the BRC and PwC teamed up to create a guide for retailers on how they can empower their customers to make positive changes towards lower carbon lifestyles. Changing the way we operate is never easy, but retailers are determined to use the next two decades to bring about the low-carbon future the world needs.

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Since 2020, over 70 leading retailers have come together under the banner of the BRC’s Climate Action Roadmap, which aims to make the retail industry, including its supply chains, carbon neu- tral by 2040.”

THIS ISSUE

THE FUTURE OF RETAIL

DATA & ANALYTICS

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RETAIL UNLOCKED: STRATEGIES FOR A NEW FUTURE Karen Johnson / Barclays

DRIVING THE RECOVERY WITH THE HAND BRAKE ON Martin Blanche / PwC

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6 BEHAVIOURAL TRENDS IMPACTING THE WAY WE’LL SHOP THIS CHRISTMAS Jonny Protheroe & Alistair Rennie / Google

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IN-STORE EXPERIENCE KEY TO BRING SHOPPERS BACK TO PHYSICAL RETAIL Andrew Firth / Ipsos MORI

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IT’S TIME TO TALK ABOUT THE MENOPAUSE Amy Prendergast // Retail Trust

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ON-DEMAND GROCERY: IS THIS THE NEXT RETAIL REVOLUTION? Elliott Goldstein & Aelf Hewitson // The MBS Group

RETAIL FRAUD AND RISK TEAMS MOVE FROM DEFENCE TO OFFENCE Ed Whitehead / Signifyd

TIME FOR STORES TO REACH THEIR PEAK POTENTIAL Candice Ohandjanian / Quadient

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PANDEMIC SUPPLY CHAIN PROBLEMS WON’T BE EASILY FIXED AND MAY CONTINUE Matt Fullard / Noatum Logistics

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FINANCE & PAYMENTS

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OPEN BANKING PAYMENTS CAN TURN REFUNDS INTO REVENUE William McMullan / Trustly

REVISIT AND REVAMP YOUR APPROACH TO RETAIL LABOUR PLANNING Chris Matichuk // StoreForce

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WHAT IF THE CEO ASKS ME... ABOUT ESG-LINKED FINANCING FACILITIES? Sukh Ahark & Edward Colville / RPC

LOOKING BEYOND LOCKDOWN: THE FUTURE OF GB RETAIL Sarah Abu-Amero / Local Data Company

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SUSTAINABILITY

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HOW DIGITAL INNOVATION CAN UNLOCK NEW FRONTIERS FOR SUSTAINABILITY Aaron Shapland / Ciklum

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GREEN CLAIMS CODE: GETTING ENVIRONMENTAL MARKETING RIGHT FOR CONSUMERS Mike Coates / CMA

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THE TRUE COST OF OUR SHOPPING BASKET Evan Michaels / HELPFUL

ZEROING OUT CARBON EMISSIONS BY REDUCING PERISHABLE WASTE David Frieberg / Planalytics

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ENVIRONMENTAL LEGISLATION AND ONLINE RETAIL Becky Thomas // Valpak

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THE BIOPLASTICS CONUNDRUM: ARE THEY AS GREEN AS THEY APPEAR? Catherine Sheehy & Alicia Levine / UL

RETAIL SOLUTIONS

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THE CHALLENGES FACED BY THE RETAIL INDUSTRY IN THE RUN UP TO CHRISTMAS / Physical2Digital

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THE 4 GOLDEN RULES FOR PAIN-FREE TECHNOLOGY TRANSFORMATION Steve Dennis / Spike

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IT’S TIME FOR CHANGE – ONLINE AGE VERIFICATION THROUGH DIGITAL IDENTITY Martin Wilson & Fiona Jones // Digital Identity Net

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AFGHAN WITHDRAWAL COULD TRIGGER ARENEWED TERRORIST THREAT FOR UK RETAILERS Scott Bolton // Aon

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DIGITAL HUB / BRC

brought to you by

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RETAIL UNLOCKED: STRATEGIES FOR A NEW FUTURE

Karen Johnson Head of Retail & Wholesale Barclays Corporate Banking

O ur latest Barclays Corporate Banking thought leadership report, Retail Unlocked, has revealed major changes in consumer habits in the period since the easing of lockdown restrictions – and the innovative ways in which UK retailers are responding.

As 42% of respondents overall – and 55% of over-55s – say that in-store is their favourite way to shop, clearly a role remains for the physical store. However, only 25% of 18-24s favour the physical. Generation Z’s digital preference will surely dictate channel strategy in future. It is already influencing the strategies that retailers adopt to entice this generation into stores. The preference for the physical shop looks set to endure for some time, with 40% of our respondents predicting that they’ll be shopping more in-store a year from now – potentially when they are fully vaccinated and feel safe to do so. Perhaps the sharp generational divide –with 47% of over-55s planning to step up their in-store shopping but only 32% of 16-24s – again reflects Generation Z’s loyalty to digital. Physical stores remain an important part of the plans for 37% of retailers. In fact, against the backdrop of well-publicised high-street store closures and brand collapses, 33% of businesses with 50-249 employees that we surveyed said they plan to open new stores. Since reopening, 52% of retailers report an increase in average spend, by an average of 9% on two years ago. This could be due to impulse shopping, such as people purchasing new furniture forwelcoming guests back into the home or high-value items such as jewellery to wear for special occasions. It could equally be indicative of the additional sur - plus income that consumers have to spend on items they have been considering during the lockdown. Shoppers also showed an appetite for a bargain, with reduced or on-offer items proving the most popular product type. Retailers report a similar story, with increased demand for on-offer items and value/own label items – with some responding by launching new affordable own-brand ranges.

Through a survey of 306 senior retail managers and over 2,000 consumers, our study shows how innovative UK retail businesses are building back better to meet the challenges – and opportunities – of a reshaped, and revitalised, retail landscape.

The return to the high street is spurring retailer confidence

Following the reopening of non-essential retail in April 2021, and as restrictions continued to ease across the UK, consumers embraced, to some extent at least, the physical shopping experience. Just over half (51%) of retailers in our survey reported an increase in footfall over the survey period following reopening, by an average of 4%. Thanks to vaccination rates, and redoubled retailer efforts, the solid majority (69%) of shoppers said they felt either safe or very safe to shop in-store. The over-55s – possibly due to being fully vaccinated – felt marginally more comfortable than other age groups, yet 60% of 16-24s still felt safe or very safe. Retailers have reassured shoppers with high hygiene standards and rigorous health and safety protocols, increased cleaning and mask requirements.

Our research shows that UK retailers could fuel demand for nearly 17,000 local high-street premises over the coming 12 months.

growth over the next 12 months.” ‘‘

The return of shoppers has given retailers grounds for optimism: 80% said they were either quite confident or very confident of

Price has not, however, been the only purchase driver. The most in-de- mand items, as reported by 45% of retailers, were those that promote a healthy lifestyle. Younger peoplewere much more motivated by products of this type: 23% among 25-34s compared with just 13% of over-55s. Retailers also report demand for sustainable products with a reduced environmental impact from a significant 38% of shoppers. The importance of sustainability has been greater since shops reopened for nearly twice as many 16-24-year-olds than the average consumer. For now, at least, the return of shoppers has given retailers grounds for optimism: 80% said they were either quite confident or very confident of growth over the next 12 months – of which 41%were very confident. One of the major retail trends of the pandemic, related to the shift to remote working, has been an increase in UK consumers shopping locally. In our survey, 17% reported they were doing so more when working from home, almost as many as said they were shopping more online (18%) in the same circumstances. With these working patterns persisting – 47% of consumers said they’re either working from home entirely or on a hybrid basis, and 43% believe they will be doing so in a year’s time – the ‘go-local’ trend looks likely to endure. Retailers see the benefits of localisation strategies

Consumers are shopping locally not only for convenience but also because they want to support smaller and independent businesses, and because the experience offers benefits that can’t be found online, or out-of-town, such as social interaction and a sense of community. Retailers are responding to this go-local trend. Our research shows that UK retailers (with more than nine employees) could fuel demand for nearly 17,000 local high-street premises over the coming 12 months. Ecommerce has been the undisputed winner of the pandemic but not far behind are community high streets, as shoppers seek to ‘look local’ and support the stores on their doorstep. With the continuation of home working, this shows no sign of slowing down, and retailers are now looking at evaluating their store estates to meet local demand. Source: barclayscorporate.com/insights/industry-expertise/retail-unlocked/

Karen Johnson barclayscorporate.com/contact-us/

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IN-STORE EXPERIENCE KEY TO BRING SHOPPERS BACK TO PHYSICAL RETAIL

Andrew Firth Head of Insights and Analytics Ipsos MORI

I n order to attract a new type of consumer back to high streets, Andrew Firth, head of insights and analytics at Ipsos MORI, argues, retailers need to gain a better understanding of shopper demands and motivations. National restrictions imposed on physical retail stores throughout 2020 and 2021 left consumers with no other choice than to pick up their phone, tablet or laptop and purchase goods online. In fact, KPMG analysis shows that UK online penetration increased from 16 per cent pre-COVID-19 to an expected median of 25 per cent in 2021. While this rate of online sales growth is expected to slow in the coming years it’s clear that the upward trajectory is here to stay, with experts recently predicting that approximately 50 stores are disappearing from our high streets each day.

The changing nature of the UK high street The pandemic accelerated the move towards online shopping - especially among younger generations. One study, published at the end of 2020, found that more than half of young adult shoppers - 30 per cent of Gen Z and 36 per cent of Millennials - planned to shop less in physical stores than they did pre-pandemic. Despite this, figures from the latest Ipsos Retail Traffic Index (RTI) paint a more positive picture for the high street’s recovery as we look ahead to 2022. While footfall remains below 2019 levels, Q3 saw an impressive rise of 10.7%, when compared with Q2, 2021. Innovative retailers are now looking to invest in their in-store experi - ence, believing that improving consumer confidence will attract more shoppers back to high streets.

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Innovative retailers are now looking to invest in their in-store experience, believ - ing that improving consumer confidence will attract more shoppers back to high streets.”

Putting experience front-and-centre Therefore, retailers must re-engineer stores in such a way that it gives shoppers a reason to return, otherwise they will suffer a permanent drop in footfall. Sephora, a popular make-up brand, sets the bar high when it comes to in-store experience and personalisation. Not only do they use cutting edge technology such as the ‘Sephora ColorMatch’, an augmented reality experience that helps consumers pick out the perfect shade of foundation. They have also merged their digital and physical teams to create a uni- fied retail team. Now, if a customer browsed online and then bought in store, the team can see that. This has helped Sephora become more aligned and move faster across in-store, online, and mobile strategies. As we emerge from what has been an exceptionally challenging 18 months for retail businesses, the industry needs to consider the role of their stores and whether they are just a place to buy or a place to explore. Lines are blurring between online and digital, so developing an omnichannel approach will be key for forward-thinking retailers. In addition, understanding environment and sustainability concerns will becoming increasingly important for brands. Without accurate data around consumer demand, levels of footfall and what now motivates an individual to visit their local high street, shop - ping mall or retail park, retailers will struggle to adapt and risk losing customers to online alternatives.

Humans want tangibility, as well as the benefits of online shopping.

Humans want tangibility. The ability to see the size and feel the quality of a product is important and, crucially for bricks-and-mortar retailers, something that can’t be emulated online. Take online grocery shopping as an example. One study found that during the height of the pandemic, 59 per cent turned to online gro- cery shopping, up from 50 per cent in 2019. Despite this temporary jump, many buyers actually prefer to assess the quality of their food in-store, highlighting why retailers need to be investing in both online and in-store experiences. Loyalty schemes are proving incredibly successful for those looking to bolster their omni-channel offering. Consumers can set-up profiles that can be accessed both online and in-store, providing offers and discounts, while the ability to collect purchase history and customer preferences data can help improve customer experience across all channels. It’s common that shoppers will visit a store, assess the quality of a product and make the purchase - confident that it meets their require - ments. Should they want to repeat their order in a week or a month’s time, online channels may prove more appealing. Understanding the term ‘convenience’ also means understanding where consumers want to shop andwhy. More recently, we have seen examples of large retailers that would traditionally have been located at retail parks investing in smaller inner-city stores, with B&Qone retailer opening express stores, with others investing heavily in their digital-to-store experience. Convenience doesn’t just relate to the in-store experience, there are examples of pedestrianised town centres helping local towns boost footfall on their high streets, with a significant number of people happy to shop locally on a more regular basis. Increasing concerns about the environment and the importance of sustainabilitywill also feed into the desire to shop local, and retailers in these locations must embrace this. The pedestrianisation of large city centres and the increase in people working from home may also mean that shoppers visit city centres less frequently, but for longer, choosing to enjoy leisure or hospitality venues alongside a trip to the shops. This will have a significant impact on how retailers use their physical stores in those high-streets and malls. Understanding convenience and the importance of sustainability

Andrew Firth ipsos.com/en

ers want to shop and why.” ‘‘

Understanding the term ‘convenience’ also means understanding where consum-

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ON-DEMAND GROCERY: IS THIS THE NEXT RETAIL REVOLUTION?

Elliott Goldstein Managing Partner The MBS Group

Aelf Hewitson Associate Consultant, Retail Practice The MBS Group

L ightning-speed grocery delivery has taken off around the world, and retailers must pay attention or risk being left behind, On-demand grocery delivery startups, which promise to deliver food and household essen- tials in 20 minutes or less, have exploded in the UK and around the world. In London, the ubiquitous Uber Eats and Deliveroo backpacks have been joined by those sporting logos from Getir, Gorillas, Jiffy, Weezy and Zapp – just a fewof the businesses racing towin their piece of the £2 trillion European grocery sector. While it is tempting to see the sudden demand for lighting-speed grocery delivery as a knee- jerk reaction to the pandemic, it is our belief that these startups represent permanent additions to the retail sector. Retailers must pay attention – to the new competition, new opportunities, and new customer expectations – or risk losing out to more forward-thinking competitors. It is easy to see the wide appeal of on-demand grocery: customers range from young pro- fessionals who don’t plan their weekly meals to busy parents who can’t fit in a trip to the supermarket. The model also encourages a ‘buy just what you need’ mentality, favoured by those looking to eat more sustainably and avoid food waste. For disabled customers, as well as anyone who finds shopping to be an arduous experience, these startups provide a welcome alternative. Investors are betting on the longevity of the sector, and the cus- tomer demographic will broaden and deepen.” ‘‘

“The current customer demographic is aged 19 to 35,” said one C-suite executive from a leading on-demand grocery company. “It’s busy innovators who are time-poor.” Initially, he commented, orders consisted of snacks and beers booked in by young people looking to avoid a trip to the shop. “But as time’s gone on, we’re seeing young, busy families ordering food for entire meals.” Indeed, most of the apps have a ‘recipe of the week’ highlight on their landing page, encouraging the purchase of ingredients for whole meals, rather than one-off snacks. Looking ahead, he says, there’s scope to innovate away from scrolling through an app, giving customers the opportunity to voice-record their order (for instance, while driv- ing) and have it arrive for when they get home. As the customer demographic broadens, inves- tors are betting on the longevity of the sector. Gopuff, which was set up in 2013, raised a further $1bn in July from Japan’s SoftBank and investment giant Blackstone at a $15bn valuation. After tripling its valuation to $7.5bn in June, Turkish startup Getir recently topped up its funds by another $150m, bringing total funding this year to more than $1.1bn. We’re also seeingM&Aactivity: Gopuff acquired rival Dija just eight months after it was founded, and in France, Carrefour has recently taken a stake in Cajoo. Understandably, some critics are warning that on-demand grocery delivery is a bubble about to burst. Likemost high-growth tech businesses of the last decade, on-demand grocery start- ups are adopting an ‘expand now, profit later’ approach. Renting ‘dark stores’, paying riders a fair wage and marketing to new customers is a costly business, and it remains to be seen whether users will be as keen to spend with these startups if delivery fees are increased. It is also an incredibly crowded market, with at least ten players scrambling for market share in the UK and taking part in a land-grab for fulfilment centres in major cities. As time goes on itwill be interesting to seewhich organisations emerge victorious andwhich fail to stand out from the crowd. Considered lead- ership teams will be crucial. Startups should aim to balance the digital expertise required

to build a slick platform with the retail expe - rience needed to disrupt the sector and truly know their customer. Moreover, as businesses grow they will need strong people leadership to manage their communities of drivers – a hugely difficult HR challenge in today’s com - petitive hiring environment (unlike Deliveroo or UberEats, most of these new grocery delivery startups have hired their drivers directly). There’s no doubt that this is the next retail revolution, and every company in the sector needs to pay attention. For supermarkets, these models provide yet more tough competition, and leaders must innovate to keep upwhile also giving customers reasons to shop in-store. Most grocers have already joined the fray: there’s TescoWhoosh, Sainsbury’s Chop Chop, Asda Express Delivery and Ocado Zoom. Morrisons has taken an alter- native route, opting to partner with Deliveroo rather than roll out its own on-demand delivery service. Amazon is also making a play: along - side its move into physical retail, its grocery delivery service Amazon Fresh is scaling up, and the tech giant is exploring options to build more warehouses with different temperature zones to facilitate fresh, frozen and ambient food delivery. However, smaller-format stores and independ- ent local corner shops will also have to work hard to not be displaced by rapid grocery apps. In fact, independents may end up being hit hardest as they simply don’t have the resources or experience to competewith these newplay- ers – although partnering with apps such as SnappyShopper is working well for some. Existing delivery apps, from restaurant food delivery to those that offer specialist pro - duce, may also need to adapt their strategies. Deliveroo has already taken the plunge, launch- ing Deliveroo Hopwhich meets its competitors’ promise of 10-minute groceries. While the market will certainly not be this crowded forever, the customer appetite for ultimate convenience and lighting-speed deliv - ery isn’t going away – and all retailers must get involved or risk being left behind.

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Startups should aim to balance the digital expertise required to build a slick platform with the retail experience needed to disrupt the sector and truly know their customer.

Elliott Goldstein elliott.goldstein@thembsgroup.co.uk

Aelf Hewitson aelf.hewitson@thembsgroup.co.uk

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TIME FOR STORES TO REACH THEIR PEAK POTENTIAL

Candice Ohandjanian UK & Ireland Retail Director Quadient

S ophisticated custom- will get shoppers visiting stores again this peak season. er-facing and behind-the- scenes strategies that UK retail’s golden quarter in 2020 saw nearly half the footfall versus the same period in 2019, with BRC and ShopperTrak reporting an annual decline of 48.4%. It’s no surprise considering the national lock - downs and temporary shop closures at that time. With no sign of such restrictions as we tran - sition into peak season 2021, surely there is a desire among consumers to get out and about into malls, retail parks and the high streets – after missing much of the magic of the festive period 12 months ago?

From the launch of eSports events in store to its QR code-enabled competitions when opening the doors to new flagship destina - tions, JD Sports is a retailerwith plenty of ideas about creating in-store theatre and excitement. Elsewhere, when upmarket fashion retailer Flannels expanded from its northern heart- lands to London in 2019 it put on a roster of monthly DJ sets in Oxford Street – generating a refreshing buzz around bricks and mortar. Zara, meanwhile, is looking to technology to add pizzazz to its physical shopping offering, with robot arms to retrieve online customer orders, an app that allows shoppers to book changing room space in advance and – in some stores – self-service checkouts. The store is now clearly more than just a store.” ‘‘

However, recent footfall data suggests a contin - ued sluggishness among consumers to hit the shops, so it’s incumbent upon retailers to play their part in drawing people out to visit them. There are several ways this can be done, and various retailers are blazing a trail for others to follow. That’s entertainment The idea of the store as an experience and the shop visit as entertainment is not new, but with even more people going online in the pandemic, the shop needs to stand out more than ever as something greater than just a transactional destination. During events like Black Friday and throughout the festive season this becomes increasingly important. Family events, product demonstra- tions, and special guest meet-and-greets can all play a part in attracting crowds, as can new tech-enabled experiences.

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Forward-thinking retailers are integrating this type of thinking into their traditional sales techniques. Selfridges deserves a mention too – if it can reposition some of its springtime activities, such as children’s film screenings and musi - cal performances, for a festive audience, it’ll create some 2021 Christmas magic for in-store shoppers in the coming months. Many retailers are looking to use customer-fac- ing strategies to impress shoppers, but there’s also lots going on behind the scenes in stores to give consumers the experiences they want. The coronavirus crisis fast-tracked several busi- nesses’ plans to use their physical estate as a major component of their eCommerce oper- ations. B&Q and Marks & Spencer have both ramped up their click & collect offering in the last 12 months as demand has dictated, while Currys, TheWhite Company and Superdrug are among the retailers to have leveraged shop staff to serve online customers via video connections. Ain’twhat you do (it’s the way that you do it)

In some cases – at grocery chains like Sainsbury’s and Waitrose, for example – stores are effec - tively doubling up as mini-warehouses to better serve local online shoppers. The store is now clearly more than just a store. Stand and deliver Retailers are developing convenient in-store propositions for the benefit of their consumers and internal operations. Much of it is espe - cially crucial at a time when HGV drivers and warehouse space are at a premium and store fulfilment is often much cheaper than getting goods to a customer’s front door. In this environment, I encourage retailers to take things further. We all work in retail, but we’re all consumers too. Click & collect is a great option for busy shoppers, but howoften have you spent longer than you wanted to in a shop whilst multiple members of staff attempt to track down your parcel? From an industry point of view, wouldn’t you want your store and staff to focus on all the aforementioned store creativity this peak period, as well as Santa’s Grotto-style events, gifting pop-ups, and advising consumers on how to enjoy a sustainable yuletide?

Collection services, on the other hand, can be ringfenced to a dedicated, mobile-operated smart locker service, keeping the functional and the experiential elements of retailing apart, in a neat and tidyway. Such a set-up adds to the attraction of in-store shopping – our partner, Lowe’s in North America, vouches for it. And lockers don’t damage dwell time. If a retailer has done a great job in creating a service-led, awe-inspiring shopping environment, people picking up parcels will go on to enter the store looking for more from that brand. Storing and fulfilling online purchases in smart lockers outside a retail store also means con- sumers can quickly pick up orders if they are in a rush (in just seven seconds) 24/7. But for the businesses themselves, this storage is more organised than the status quo and represents a clever use of their physical estates. Unlike last year, there’s no reason to settle for a trickle of store visitors this festive season. Footfall will surely increase for creative retailers that use, design and kit out shops in the ways we’ve underlined – but the clock is ticking to get all the right elements in place.

Candice Ohandjanian c.ohandjanian@quadient.com Quadient.co.uk

The shop needs to stand out more than ever as something greater than just a transactional destination.

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PANDEMIC SUPPLY CHAIN PROBLEMS WON’T BE EASILY FIXED AND MAY CONTINUE

Matt Fullard Business Development Director Noatum Logistics UK

T he pandemic is undermining the global infrastructure that supports supply chains, and trouble looks likely to continue into 2022 and possibly 2023

DISRUPTION Usually interruptions to global shipping are overcome without lasting impact, but with supply chain operations so disrupted, since the beginning of 2020, even the slightest issue is having a disproportionate impact, with ripple effects, that spread disruption much wider than normal. In March, the EverGiven blocked the Suez Canal, disrupting trade flows between Asia and Europe, then COVID cases forced a partial shutdown of Shanghai, one of the world’s largest ports, followed by Ningbo, the second largest container port. Rolling lockdowns have shut down swathes of Asia, with parts of China entering lockdown, then opening, just to be shut down again and now factories inmainland China, are strugglingwith a series of power shortages. Laden container ships are idle, waiting for berth space at ports in North America, Asia and Europe, with schedule reliability at all-time lows and shipping lines skipping the busiest ports. The effect of this disruption is cumulative and it comes as volumes continue to rebound due to the strong recovery in Europe and North America. It is effectively reducing capacity across the container supply chain by substantially slowing the movement of vessels and containers around the world. With limited capacity and sustained high demand, supply and demand has pushed freight rates to levels never seen before, and as that addi- tional cost is inevitably passed on, inflation increases. Shipping containers have become scarce. Theymay be sitting unopened for a week or two and thus cannot be put to work for another ship- ment, which is why lines have begun to restrict free time and enforce demurrage contracts. The problem is compounded by the HGV crisis and shortage of truck drivers available for container transport, with bookings made weeks in advance and containers still waiting to be picked up. Obtaining vessel space continues to be challenging, with delays along the supply chain and high-cost levels, that may be impacted further by peak season traffic. OUTLOOK New-build container vessels will start to come on stream from next year, though it should be noted that much of this new capacity could reignite the current global port disruption, because many ports do not have the infrastructure, cranes, equipment or capability to handle Ultra Large Container Ship (ULCS) vessels, that carry more than 20,000 containers. And with just 9 shipping lines, across 3 alliances, controlling over 90% of global trade, managing their capacity effectively means they will enter the post-pandemic era in a much stronger position and ensure they maintain healthy returns.

Theworld’s economy depends on global supply chains, but the pandemic is undermining the global infrastructure that supports supply chains, and trouble looks likely to continue well into 2022, with some expectation that disruption could continue into 2023. The continued disruption of supply chains explains why eCommerce orders are taking longer to arrive, why there’s empty store shelves, and why purchases may take months instead of weeks to arrive. This unprecedented situation is causing prices to rise at one of the fastest rates in a decade, contributing to inflation on a global scale.

‘‘

TAKE CONTROL - Use online visibility tools to adapt supply chain plans, prod - ucts and volumes, to overcome local challenges and meet destination market demands.”

THE CAUSES The disruption began with the economic upheaval of the pandemic. But it is now being made worse by the strength of the economic rebound, a shortage of workers, and a transportation system that is overstressed. Last year when consumers were locked down, no longer able to spend money on going out and services, they spent instead on clothing, prod- ucts and electronic goods. Having laid up vessels when China first locked down last January, the shipping lines were unprepared to deal with the sudden (and sustained) consumer-driven demand for space that began in the 2nd quarter, espe- ciallywith many of their empty containers out of position. The situation was exacerbated by the shortage of supply chain workers, owing to COVID and COVID-safe working practices, which is when ports, inland terminals and warehouses began to get congested. The global fleet of passenger aircraft were grounded at the beginning of the pandemic, removing over 50% of (belly-hold) cargo capacity at a stroke, crippling the time-sensitive mode and pushing even more demand to the ocean mode.

OPTIMISE eCOMMERCE - merge sales order data with inventory management to automate picking and fulfilment processes, that link with courier and returns management solutions, which scale with your growth.” ‘‘

With air passenger travel gradually reopening, more belly-hold capacity will become available on long-haul routes, including the critical trans-At - lantic and Asian routes. Sea and air freight will eventually come back into balance, but for now the pandemic’s consequences will be measured in shipping costs, prices, inflation and in delays. The pandemic supply chain challenges that have driven up prices for consumers and slowed the global economic recovery, will lessen in time. But recovery remain tenuous and easily set back by unseen events and weak links, like the shortage of HGV drivers in the UK and China’s drive for zero COVID cases. By 2023 (or even possibly late 2022) the COVID19 situation should be under control and consumer demand settled, providing stability in global shipping.

Political and global events that cannot be considered or are transparent currently, may yet have a huge influence on global supply chains, on all modes and in all regions of the world. Local issues are now intertwined with global occurrences, due to the fragile state of ocean and air freight markets, which demonstrates how unpredictable the movement of your goods has become.

Matt Fullard +44 (0)7507 796 028 matt.fullard@noatumlogistics.com noatumlogistics.com

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REVISIT AND REVAMP YOUR APPROACH TO RETAIL LABOUR PLANNING

Chris Matichuk General Manager StoreForce

T he retail landscape has changed more in the last 18 months than it has in the last 10 years. Stores have been tasked with many new activities to support digital sales. Store performance is also being measured dif- ferently – through a combination of brick- and-mortar and digital sales. These changes have impacted labour planning in a big way. Retailers need to consider that legacy labour planning methods may no longer fit with the current operation. There has never been a bet- ter time than now to revisit and revamp your labour models. Below are some different labour planning methods to consider. These methods take into account the retail trends of today. These trends include changing customer behaviours, and the new sell and non-sell activities that have emerged recently in retail. They also consider your employees and how you can give them greater choice and flexibility. These labour planning methods will help ensure your store is staffed with the right people at the right time, and with the right quantity required for your store’s customer patterns. Non-sell activities now account for upwards of 50% of overall labour hours. Additional non-sell activities are driving the need for a large piece of the labour pie. New tasks performed in store include BOPIS, picking and packing, appointment booking and virtual appointments, to name just a few. Now is a good time to review your selling and non-selling activities and update your scheduling profiles to reflect the current in-store activities. Non-sell activities now account for upwards of 50% of overall labour hours.” ‘‘ 4 Labour Planning Methods to Consider in Specialty Retail Review Sell/Non-Sell Split of Hours

Available Capacity Most stores will have some available capacity within their existing store schedules at specific times of day that can be used for non-selling activities. These are the times when customer patterns don’t align with minimum staffing requirements, based on other policies. Before adding more labour hours to your stores, consider your available capacity to perform additional tasks in-store. Try to forecast each store’s daily available capacity and provide visibility to them. These elements will help increase your labour efficiency. Labour Banding Labour banding groups together similar – or like-stores, based on common characteristics to assess labour spend and productivity. The assessment focuses on identifying opportunities to re-balance labour. It objectively defines labour standards by groups, to allocate the right number of labour hours to each store. These standards first ensure that retailers maintain a base coverage. They then use productivity to invest hours based on sales volume. This exercise drives results by funding those stores with the greatest opportunity. It also provides a more consistent service level across all stores within the group. Labour banding is the foundation for labour planning in speciality retail.” ‘‘ Labour banding is the foundation for labour planning in speciality retail. It objectively balances the hours to be spent within your brands, stores, and seasons. Rebalancing hours away fromover-funded stores to under-funded stores identifies opportunities for increased sales. These opportunities result in a more consistent customer experience across all stores. Labour Pooling In markets with a density of stores, consider labour pooling for increased scheduling flexibility. You’ve invested time, energy, and money to train part-time employees on processes, product knowledge, and brand values. So, provide them with opportunities to work additional hours. Pooling employees allows them to work in multiple stores within the same city. This provides efficiency for your stores and flexibility for your employees.

Pooling employees allows them to work in multiple stores within the same city.” ‘‘

Pooling store labour goes a long way in creating better quality jobs for your store part-time staff, particularly in off-peak seasons. While part-timers may receive 3 or 4 shifts per week during holiday, they are often reduced to 1 or 2 shifts per week when February comes. Pooling labour across stores offers you an actionable strategy to retain and incentivise your top performers. It’s awin-win. You increase employee retention and tenure and reduce the need for constant hiring and training. The result is a pool of employees who are engaged and knowledgeableworking across your stores. Posting shifts and allowing employees to select a portion of their schedule gives them flexibility and control. These are employer attributes that employ - ees are seeking in today’s workplace. Become an Employer of Choice by incorporating flexibility into your scheduling practices.

Retailers are embracing the evolving role of the store. They are also embracing changes in the customer’s buying journey. Latest trends call for new approaches to planning and measuring labour. With all the recent changes, it’s important to be open to new methods and really challenge the status quo. Stores have changed, and so should the way we plan labour to support this new operation. If you would like to contact StoreForce, please follow this link.

Chris Matichuk

Stores have changed, and so should the way we plan labour to support this new operation.

THE RE TA I L ER

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LOOKING BEYOND LOCKDOWN: THE FUTURE OF GB RETAIL

Sarah Abu-Amero Marketing Executive Local Data Company

K ey findings from the latest Local Data We began 2021 in our third national lockdown, after a turbulent Christmas period which saw varied tier restrictions across the country. As the vaccine rollout gathered pace and restrictions eased, we emerged into a retail market reeling from the effects of a pandemic. Much has been made of ‘recovery’ for the retail sector: what recovery could look like; when we can expect to see it; who will recover, and how; and where we should invest our time and resources to bring recovery about. Our latest report, comprising our research and analysis for the first half of 2021, has already shed light on the cumulative impact of the pandemic on retail, and what we can expect to see in future. Record growth for independents For the past few years, independent retailers have been more resilient than bigger brands. In the first half of this year, independents grew by 804 units, the first increase tracked since H1 2017. This growth was mostly seen in the convenience and leisure sectors; the number of independent grocers, butchers, bakers, cafes and fast food outlets grew. Government support, business rates relief and the commercial rent moratorium helped some businesses remain operational, and a large supply of vacant units allowed independent business owners to negotiate better rent terms. Moreover, local businesses were boosted by customers, not only because they were working from home, but also because of growing consumer trends towards sustainability and supporting small business. Company report, and what they mean for rebuilding the retail sector post-pandemic

Shopping centres were hardest hit The effects of high-profile administrations, particularly those ofDebenhams and theArcadia group, are continuing to be felt most acutely by shopping centres. Since H1 2020, the vacancy rate for shopping centres has risen by 3.8%. The loss of major anchor stores caused strain on surrounding retailers, and locations such as retail parks and high streets offered a safer, socially-distanced shopping experience. Not all shopping centres were alike, though: it was the larger retail destinations with a greater exposure to at-risk categories like fashion that suffered most. Smaller community shopping centres, more often anchored by a supermarket and hosting a higher proportion of ‘essential’ retailers, were better placed to cater to local populations in terms of both retail mix and location during periods of restriction. Fast food takeaway thrives H1 2021 saw the emergence of a new fastest-growing category: fast food takeaways gained a net 333 units in this period. With restrictions on indoor dining only having been lifted in May this year, we still relied on takeaways as we did in 2020. Fast food brands, which often have established delivery platforms, grew their success by expanding their estates strategically to capture greater residential catchments, with many opening ‘dark kitchens’ to support fast delivery fulfilment.

download-report-h1-2021.” ‘‘

The full Local Data Company report on H1 2021 is available to download free of charge at www.localdatacompany.com/

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Embracing and adapting to emerging consumer trends will give retailers a better chance of thriving amid uncertainty.”

AUTUMN 202 1

1 9

NET CHANGE IN UNITS BY BUSINESS TYPE

2000

804

762

1000

4

0

-659

-986

-1000

-1554

-1833

- 2001

-2000

-2848

-3000

-3695

-4000

-5251

-5000

-6001

-6000

-7000

H1 2016

H1 2017

H1 2018

H1 2019

H1 2020

H1 2021

Independent

Multiple

Online shopping is here to stay It is, perhaps, a sign of the times that we cannot talk about physical retail without talking about the migration of spend to online channels. ONS data revealed that, across retail, online sales made up 28.1% of all spend at the end of H1 2020, an increase of 7.8% in just a year. The pandemic only accelerated this trend, but we seem to have missed the experience of shopping in person: following the reopening of ‘non-essential’ retail, demand for offline shopping did increase. At the end of H1 2021, the proportion of all retail sales made online decreased to 26.7%. However, this is still 7.8%higher than the pre-pandemic figure, indicating that online shopping is here to stay. Early last year, experts had already posited that physical storeswere set to change in terms of purpose and that is indeed happening. Many retailers have shrunk their physical store portfolio, with the remaining locations often acting as showrooms and click-and-collect hubs to support online channels. Some are creating ‘experiences’ at physical stores to excite customers and act as a catalyst for a buyer journey that may end online.

The impact of home working Major GB cities like London were hit hard by the pandemic in the absence of tourists and commuters. The lifting of restrictions did not see a widespread return to the office and, even with recent reports of greater worker footfall on public transport and in cities, ‘hybrid’ working models may continue to be the norm. As a result, local communities have fared markedly better than commuter cities. In the near future, we expect more retailers to rationalise their store estates, reducing their physical presence to focus on online channels. Some may follow in the footsteps of GAP and close physical stores completely. The worst of pandemic-related closures should be over by the end of 2021, when most restructuring should be complete. Across categories, retailers will bank on the trends they expect to continue; fast food takeaways may expand beyond a saturated London to open in other regions, for example. We have all seen how profoundly the retail sector has changed in such a short space of time. As we see the return of colder weather, changes in COVID infection rates may affect restrictions on domestic and inter - national travel, trade and government support for retailers in the last quarter of 2021. Embracing and adapting to emerging consumer trends, such as the growth of delivery apps and increased demand for offline socialising and experiential retail, will give retailers a better chance of thriving amid uncertainty.

Sarah Abu-Amero marketing@localdatacompany.com

Credit: Mike Petrucci on Unsplash

THE RE TA I L ER

20

DRIVING THE RECOVERY WITH THE HAND BRAKE ON

Martin Blanche Partner: Head of Indirect Tax PwC

W hy new border controls are adding to UK busi- nesses’ supply chainwoes In January 2021, UK exports to the EU fell dramatically after the first Brexit trade controls came into force, from£2.1 billion to £1.1 billion, while imports fell by a more modest but still significant amount. The collapse in exports had an especially big impact on the food industry in particular. PwC market analysis shows that 60% of busi- nesses sawexport volumes fall or stall. Similarly, 40% of businesses reported a drop off in the levels of imports. While new customs require- ments will have been a contributing factor to this, the pandemic and the associated supply chain issues that have been widely reported in the media are likely to have been the most significant driver in the reduction in volumes. We recently surveyed businesses on the impact that these changes have had and how pre- pared they are for the withdrawal of deferred declarations and the introduction of further regulations. There’s no doubt that COVID-19 restrictions had – and continue to have – a significant impact on UK businesses. However, our survey found that respondents were more likely to identify further changes relating to the UK’s transition out of the EU as a greater external threat to the future health of their organisation, than the pandemic. Asked about internal threats, businesses’ most common response was compliance with new regulations, however concerns were wide ranging and included: confidence in the sup - port they receive from brokers, access to the necessary skills and expertise, and access to the right technologies.

Bouncing back? Notwithstanding recent challenges, upbeat forecasts point to a big rebound in consumer spending as we begin to emerge from the COVID-19 pandemic. Consumer confidence is at a five-year high, according to recent findings from YouGov and the Centre for Economics and Business Research. People say they have positive expectations for the next 12 months, and this indicates that they are ready to splurge on consumer goods, add value to their homes through improvement projects and invest in their businesses. Other research has reached similar conclusions. PwC’s Consumer Sentiment Survey – Summer 2021 finds that people intend to increase their spending in the hospitality sector as well as on groceries and home improvements. Meanwhile, the Bank of England predicts 8.9% growth in the UK’s real GDP through 2022, while the European Commission expects the Euro region’s GDP to growby 4.8% in 2021 and 4.5% in 2022. All of this means that businesses – after many months of constrained operations to help protect the nation’s health – are set to see a much-needed boost in revenues and cash flows. If they don’t want to miss out, they need to be sure they have the capacity to meet the expected demand. That’s especially vital for small and medium-sized businesses left hurt - ing during 2020 and continuing to struggle through 2021.

This is welcome news after the economic con - traction of 2020 – the largest since records began. But many businesses can’t relax just yet. That’s because, in addition to other challenges, some are struggling to meet customs require- ments, incurring costs and impacting the flow of goods which could ultimately hamper the overall recovery. Now businesses are facing several new chal- lenges: approaching deadlines for the deferred customs declaration scheme, expiration of that same scheme in January 2022 and a host of new customs requirements for products of plant or animal origin, although the original implementation date of 1 October 2021 has been delayed, giving organisations more time to prepare. We found that 40% of all firms were not aware of one or both of the key deadlines and smaller businesses were much less likely than larger firms to be aware of these. Upcoming customs requirements could put a dampener on recovery Wewill be facing more customs changes as the government completes regulatory adjustments for the post-Brexit economy. Businesses must be ready if they want to enjoy the benefits of the predicted economic recovery. As the original deadlines loomed, for food imports in particular, we found a lack of aware - ness and readiness about what the newcustoms controls would require. Large organisations are coping, although they are doing so at a large cost – in its recent annual statements, for example, one major UK retailer has attributed a £30 mil - lion increase in costs to customs requirements. But small and medium-sized businesses are at risk of feeling even greater pain. In our survey, over half of businesses (58%) expressed confidence in their ability to adapt to the new trade environment. But that still leaves a significant 42% who said they were either concerned or uncertain about their ability to do so.

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Large organisations are coping, although at a large cost, one major retailer has attributed a c.£30m increase in costs to customs in its annual statement.”