Home: Issue 6 2011 Lead Story › Changing patterns

Changing patterns

Changing patterns

02/01/2012 | Channel: Logistics / Packaging

Footwear and fashion sales growth is happening on-line and this means distributors have to adapt

Some commentators say that the best warehouses are the emptiest ones. A range of goods come in, are reworked, repackaged and specifically picked into roll cages, onto pallets or into parcels, and delivered out to individual stores or customers later the same day.

The logic is good. With fashions and consumer tastes changing rapidly, no one wants to be paying for warehouses full of obsolete stock. On the other hand, consumers are also very demanding in terms of delivery schedules. They order today and expect delivery tomorrow – or at least within a few days. So, especially for companies sourcing from overseas, there is no alternative but to have a significant amount of stock held close to their customers.

The trick, obviously, is to get the balance right and the use of sophisticated planning, logistics and analytics software helps companies forecast demand and track exactly where their stock is in the supply chain.

In the footwear and fashion industries, demand is particularly difficult to predict as trends emerge or evaporate almost overnight. A change in the weather or a celebrity endorsement can send sales soaring – or plummeting.

Derek Gibson, logistics director for DSV Solutions, a major player in fashion logistics in the UK, says there has been a dramatic fall in sales over the last few months – and the warehouses are full of stock.

“It has been a slow start to the financial year with only the good weather and a clutch of Bank Holidays in April helping lift fashion and footwear sales – but that was only temporary,” he says. So, many retailers, who order stock a season in advance, are working out how to shift their surplus stock.

“The problem is not so noticeable at the luxury end of the market, or even for the value retailers. It is mainly the middle market where consumers have experienced a reduction in disposable income,” he explains. “Demand has become very erratic so retail buyers find it impossible to predict what volumes will be needed.” The only route to market bucking the trend is internet sales, where retailers can respond quickly and reduce prices where necessary to stimulate demand.

“It is working like the out-of-town sales outlets, with the special offers available only on-line. The retailers are using this to reduce their surplus stock.” This has changed the demands on the DSV logistics operations, with larger deliveries to stores falling and being replaced by individual item/parcel deliveries to homes.

“These home deliveries have become much more sophisticated,” says Derek. “For instance, customers are now sent a text or email message to give a one hour window of when the delivery will be made. And deadlines
for ordering for next day delivery are getting later and later.”

Assuming the internet sales trend continues, with or without the economic recession, it seems a wholesale revision of the supply chain dynamics is necessary.

“The concept of having a single central warehouse for the whole of Europe is not working for this distribution model,” says Derek. “It is not cost effective, or even possible in some cases, to meet the demand for next day deliveries without smaller, regional fulfilment centres.”

The sourcing of products is also changing, with retailers no longer seeing China as the prime location for manufacturing, Derek says. “Not only are labour costs rising there, but the length of time it takes for products to be delivered is making it difficult for retailers to respond to changes in demand. The situation is making places like Turkey, Romania and Morocco look like good locations for a manufacturing facility to serve European consumers.”

Of course, there is increasing demand from the domestic market in China and other emerging economies, with international retailers opening stores to cater for the growing middle classes.

It is not unknown for goods, especially at the luxury end of the market, to be manufactured in China, shipped to warehouses in the UK or other parts of Europe and then re-exported back to Asia, and even China itself.

“The changing patterns for both sourcing and delivery to end consumers are creating lots of opportunities for logistics companies like ourselves to develop the most efficient supply chains to suit the new requirements,” explains Derek.

“Obviously everything is easier with the level of visibility now available through supply chain management software systems, but it still requires expertise and experience to understand the data and how to use it to make improvements.”

DSV Solutions’ specialist services
DSV Solutions uses Thrapston, near Kettering (one of its many UK depots), as a main hub for its fashion and footwear clients. The 200,000 sq ft hub, with 150 employees, handles many designer and own-brand labels on behalf of international retailer and wholesale distributors. It offers a comprehensive range of added value services, including reworking, quality control, remerchandising, packing, adding security tagging and price tickets and preparation for display/sale. It also handles returns for many customers, replacing, refurbishing, sending rejected stock back to the manufacturer and/or holding out of season stock until it is required again.

The hub also features an ‘embroidery’ unit where two full-time DSV employees operate giant sewing machines and heat sealing equipment to provide personalised logos for a range of garments.

More than seven million pairs of luxury and fashion shoes are processed though DSV’s facilities each year. Services include pick and pack, single pair replenishment, labelling, plus retail and e-commerce support.

Comprehensive transport services for both distribution and inbound freight shipments are provided directly or though DSV Air & Sea or DSV Road. At Thrapston, DSV has operated direct import road services from Italy, Spain, Portugal and Romania specifically to meet the needs of the footwear industry for over 30 years, despite the overwhelming volume of goods arriving from the Far East and Indian subcontinent.

A spokesperson for one leading customer, says: “DSV provides a cost effective and flexible approach to warehouse services. Over the years, its ability to quickly adapt to changing requirements has led to an enhanced service for our retail customers.”

For further information visit: www.dsv.com or visit the Twitter page @DSVUK.