Sunday 24th Mar 2019 - Logistics Manager Magazine

Online vs the high street

With many long-established high street chains struggling to keep their stores open, will the demand for yet more home delivery ever end? Penelope Ody.

Attempting to bring some order to the drought-ridden chaos that is my front garden, inevitably provided an ideal opportunity to note the passing traffic on the quiet rural lane outside my house. In the space of an hour or so, several “mamils” (middle-aged man in lycra) on bikes, a few dog walkers who passed the time of day, a couple of horse-riders, two cars, a local builder’s truck and five delivery vans: Yodel, DPD, FedEx, Sainsbury and Ocado. Hardly surprising, then, that so many of our traditional high street retailers are struggling. 2018 has already seen a spate of CVAs [Company Voluntary Arrangement] from such established retailers as Mothercare and New Look while the list of those who have called in administrators or folded entirely grows daily: it includes House of Fraser, Toys R Us, Maplin, Poundworld, and Jacques Vert. Up to the end of July, the Centre for Retail Research had recorded 26 retail company failures this year, which affected 1,906 stores and 21,355 employees – and that doesn’t include the store closures announced by retailers in CVAs (31 in the case of House of Fraser) or those struggling to remain profitable (more than 100 closures planned by Marks & Spencer over the next four years). Whether one blames Amazon, Internet shopping in general, or the fondness of millennials to shop via their smartphones for immediate delivery and instant gratification, we are faced with a vicious circle of inevitable decline. Time-pressed shoppers visit stores less, because of – among other factors – increasing traffic and parking problems; instead they shop online because it is quick and convenient; so the stores close; less choice in the high street means that shoppers are then forced to buy more online, while visiting a distant shopping mall involves longer car journeys with more parking problems; so they buy more online… Back in 2011, retail consultants Javelin (now part of Accenture) produced a report on the likely decline in store numbers due to the impact of online shopping. Their guesstimates by 2020 included a 23 per cent fall in store sales for non-supermarket chains and a 31 per cent decline in the number of multiple store outlets in town centres: in presentations they would speak of “the last man standing” – the high street survivors providing essential services such as pharmacists or hairdressers. Given the decline in numbers this year that figure of 31 per cent is starting to look like an underestimate. But what are the implications for the logistics market if we do switch en masse to buying online? For a start that increase in numbers of light goods vehicles on rural lanes doesn’t help the ongoing pothole problem (or where the edges are crumbling as cars are forced to pull into the grass verge to keep out of the way of delivery drivers in a hurry). There is also – as we all know – a shortage of van drivers. If, as predicted, many East European drivers head for home after Brexit, then that shortage will be exacerbated. At the same time, shoppers expect minimal delivery charges, and many e-tailers use free delivery as a marketing tactic. Not surprisingly a growing number of shoppers will add items to hit the free delivery threshold and then return the excess (also free). This may change in future as the driver shortage means that e-tailers will struggle to cut the sort of deals that currently keep charges low. Until then logistics companies are under pressure to cut their costs – hence those persistent reports of “self-employed” delivery drivers paid peanuts per parcel. Even so, some companies’ attitudes to their staff can still surprise me. Having waited in at the appointed hour for my parcel the other day, I then received an e-mail telling me that as I wasn’t at home I’d have to rearrange delivery – instructions “as on the card”. I checked and there was no card – more significantly the dog, who always barks enthusiastically when anyone comes to the door, had been notably silent all morning. So I complained, and after various attempts managed to actually speak to someone about the non-delivery and lack of any card that would confirm the driver had actually been at my front door. “Had he even bothered to come the house?” I asked. “Our drivers don’t get paid if they don’t deliver a parcel,” was the reply, “so he had no incentive not to deliver the first time”. Paying peanuts is bad, but paying nothing because – through no fault of their own – a driver cannot deliver a parcel must surely be unacceptable. Putting van drivers on the staff payroll sooner rather than later, would certainly push up costs, but if shoppers had to pay a realistic price for their deliveries, it might just persuade some of them to visit our struggling high streets instead.

This feature first appeared in the September issue of Logistics Manager.