JULY 2014REPORT

Supply Chain

SPONSORED BY

Tackling returns is complex, and there is no magic bullet. Returns have become bogged down in the vocabulary and remit of operations and logistics – they’ve become someone else’s problem. It’s so easy to blame the delivery company or those pesky customers buying two sizes of everything. It’s harder to face that ecommerce has changed how people buy and that everything from buying strategies to marketing and stock coverage are affected.

From the supply chain roundtable with Drapers as well as discussions we have hosted with businesses,

we’ve seen the same internal barriers occurring in retailer after retailer. These include: incentivising revenue targets over profits; failing to understand the margin effect of returns, including reselling returned stock at a loss; assuming a return to be a positive outcome for a customer; stopping all key performance indicators and performance metrics at the sale; accepting high levels of returns are inevitable; a lack of focus on shortening the period to get returned stock back on sale, including fulfilment of clean stock ahead of returned stock; lack of enforcement of existing returns acceptance policies; and poor data visibility and a lack of actionability from existing returns data.

There is no fix to this without a top-down approach, nor can a single group solve returns alone. A focus on helping customers keep more of what they buy means buying, sales and marketing, fulfilment and service processes can be co-ordinated to ensure more purchases are kept, as well as improving customer satisfaction and increasing profits. With a leadership vision like that, those internal barriers seem a lot more surmountable.

WELCOME

Drapers Supply Chain Report / JULY 2014 1

Speak to some of the supply chain direc-tors at the high street’s leading fashion retailers and the same message will come back time and time again: logistics and

supply chain has gone from being a necessary evil to an essential function. Without a well-oiled supply chain in place, it is all but impossible to flourish as a multichannel operator, let alone on an international scale. Right now, retailers and brands across the board are re-evaluating how they do things and how they are going to need to be able to do things as their businesses grow.

It is with this in mind that we bring you our annual Supply Chain Report, in association with Clear Returns and Alvanon, to try to address some of these issues. Often when it comes to customer satisfaction online retailers live and die by the final mile, so we start by looking at best practice in regards to delivery and the importance of getting it right first time

on page 2. And with increased online sales comes its less welcome companion, returns. We look at how retailers can reduce these through clearer and more accurate product descriptions and sizing information, and both online and in stores through fit, on page 4. We then take a step further back up the supply chain, and ask how integral a single view of all stock is to delivering consumers the products that they want on page 6. On page 8 we focus on manufacturing and how rising labour and transport costs in the Far East – along with demand for

increased speed to market – is benefitting UK suppliers. Finally, on page 10, we bring you the find-ings from our supply chain roundtable, attended by

representatives from Arcadia, Blue Inc and Moss Bros. We’re likely to see change in the coming years as retailers refine

their processes at home before heading overseas – and those not making these investments are failing to invest in their future.

The supply chain makes or breaks brands

JAMES KNOWLES FEATURES AND SPECIAL

REPORTS EDITOR

SPONSORED BY

WITH THE RIGHT VISION, EVEN RETURNS CAN BE ADDRESSED

WORKING TOGETHER, WE CAN RECREATE A UK SUPPLY CHAIN

Alvanon is delighted to support this Supply Chain Report, which could not have come at a more opportune time. Many companies are revisiting their sourcing options and actively evaluating the latest technologies that deliver real design, development, production and distribution efficiencies.

No matter where we sit in the supply chain we all share the same objective – to create clothes that consumers want to buy, preferably at full price. Our industry is currently characterised by over-supply – some 60% of garments we supply are sold at

discount. This has to change – we can produce clothing in the right style, colour, size and fit if we make the most of consumer 3D body shape data and decrease the product development lifecycle and time to market to get more of the ‘right’ garments into the stores while shoppers want to buy them.

Fortunately, as this report demonstrates, we have the consumer research, product prototyping and development tools and technologies to effect these changes. Speed to market is fundamental, and while off-shore production will always play a significant role in global garment supply there is now a real political will among many of the most influential businesses to form collaborative relationships with ‘local’ manufacturing suppliers.

We have the opportunity to reshore some of our manufacturing and all of us have a part to play. We need to make the product development, production and technical side of our industry attractive to a whole new generation of pattern cutters, sewn product workers, technical and quality professionals. Together we can restore the diversity and credibility of a responsive and fully integrated UK supply chain.

ED GRIBBIN PRESIDENT, ALVANON

VICKY BROCK CEO, CLEAR RETURNS

CONTENTS02 Get It Right The First

Time The final mile of a purchase is often the most complex

04 Point Of No Return Returns can be a headache for retailers and shoppers

alike, but reducing them can affect the bottom line

06 A Bird’s Eye View Without a real-time view of stock management, retailers could be selling themselves – and their customers – short

09 Bringing It Home Demand for UK manufacturing is rising

12 Roundtable Our expert panel discusses the importance of a single view of stock, but find achieving this is more difficult than it appears

Drapers Supply Chain Report / JULY 2014 2

The website might look slick and attrac-tive, the clothes beautifully illustrated and the price affordable – but if the product is lost or arrives late or

damaged, then all this effort is wasted. The ‘last mile’ of delivery is an essential part of the online experience, but clothing manufacturers and retailers are still struggling to make it work seam-lessly and efficiently.

According to research by supply chain tech-nology systems provider JDA, which counts Marks & Spencer, Puma and Mulberry among its customers, one in five online shoppers in the UK is experiencing problems with home deliveries when purchasing online, while 61% say they would switch retailer if they received what they describe as an unacceptable home delivery or click-and-collect experience.

Meanwhile, adding to the pressure to get this process right is the continued rise of social

The final mile of fulfilling a customer’s online order is fraught with challenges, but can make or break your future relationship

Words by SIMON BROOKE Illustration by FRANCESCO BONGIORNI

GET IT RIGHT THE FIRST TIME

CUSTOMER DELIVERIES

media. More than half of online shoppers choose a retailer based on social media comments about delivery, according to the UK Consumer Home Delivery Survey 2014 from etail trade body IMRG.

“Any negative perception about a retailer’s delivery offer will not just affect existing customer loyalty, but also customer acquisition,” says Andrew Starkey, IMRG head of e-logistics. “To enhance that experience, apart from cost and service quality consumers are looking for choice.”

Shoppers’ increasing demand for efficient, affordable delivery is high-lighted by the report’s discovery that 41% would pay no more than £1 for a specific time slot delivery, compared with 27% a year ago.

“Increasingly, the vast majority of consumers believe retailers should ensure the delivery companies they use operate to the same high standards as their own brand and should be held accountable if issues occur,” says Lee Gill, vice president of retail strategy EMEA at JDA. “Given the rapid growth rate of both click-and-collect and home delivery, and the likelihood of customers demanding shorter windows from order to delivery or receipt, this is a problem that has to be addressed with some urgency. If this doesn’t happen, brands risk negative exposure.”

Lewis Marston, chief executive of Rocket Consulting, which specialises in supply chain and warehouse management software, believes that rather than being seen as a challenge to be over-come, when handled correctly last mile delivery can enhance a clothing brand. He advises compa-nies to offer – and adhere to – a narrow delivery window, with the customer being notified of any changes to this as quickly as possible.

“This time slot must be easy for the customer to change, whether online or via a mobile app,”

says Marston. “The logistics arm also provides an opportunity for fashion and retail suppliers to extend the brand to the point of delivery, rather than items arriving with the customer under the logistics company’s brand.” Rocket Consulting’s LogiScope product, for instance, enables the electronic proof of delivery, usually the customer signature screen on the handheld device carried by the courier, to be branded by the retailer.

“Today’s sophisticated mobile logistics management applications are also able to link vehicle and driver performance data, called tele-matics, to the deliveries,” explains Marston. “The

additional business intelligence this creates can help fashion retailers drive up service levels at the same time as reducing logistics costs.”

Next uses distribution companies including Hermes in the UK that have local knowledge, says a source close to the retailer. In many cases drivers have become familiar with the prefer-ences of frequent customers, even to the point of knowing where they can safely leave packages for them without needing to ask.

Fashion brands and retailers that sell overseas need to factor this consideration into their logis-tics strategy. The US is the number one market for 80-year-old British sock brand Pantherella, whose stockists include Harrods and Selfridges, and it chose its partner UPS with this in mind.

“UPS has such a strong network with really reliable delivery times of two to three days from the UK into the US. It’s also a familiar courier brand to our American customers and they can then track the delivery right through to their town,” says chief executive Justin Hall.

Over the last few years, thanks to the growth of online, a variety of new delivery and returns collec-tion methods have been launched. Collect+ allows online customers to collect and return their purchases from more than 5,500 newsagents, convenience stores and supermarkets

such as Spar and Asda as well as petrol stations around the UK. It claims 90% of people who live in the UK’s towns and cities are within one mile of a Collect+ pick-up point. Its clients include Boden, Very, John Lewis, Dorothy Perkins and Coast.

“Feedback from customers has been over-whelmingly positive,” says Chris Potter, opera-tions development manager at Boden. “The convenience of return locations near to home, work or travel that are open early until late is a particular benefit to our customers.”

DPD UK, a subsidiary of France’s La Poste and which counts River Island among its clients,

offers customers a one-hour delivery slot and keeps them informed by using text messages. They can even track progress of the delivery van on a map to identify the delivery to the nearest 15 minutes. In February it launched a service with Asos to give customers notification of their delivery slot the night before.

Customers can also choose to have their purchases delivered to an Amazon Locker, of which there are now more than 300 around the UK and which work with a code system. The etailer is now extending this option, with the recent announce-ment that it will install lockers at two London Underground stations, Finchley Central and Newbury Park.

The most significant factor for final mile delivery could well be

click-and-collect. According to research from Planet Retail in April the proportion of UK shop-pers using click-and-collect is set rise to 76% by 2017, more than double its current level. Already, this delivery method accounts for 45% of Next’s online orders.

“Fashion retailers must look to marry the bene-fits of shopping online – assortment and conven-ience – with the ability to collect, try on and, if necessary, exchange the item in store. Click-and-collect is a win-win for the fashion sector,” says Natalie Berg, global research director at Planet Retail. “From a shopper’s perspective, it’s a hassle-free way to reserve a desired item without the fear of having to trudge to the post office if it’s not the right fit. For retailers, it drives footfall – and in most cases additional spend. The rise of alter-native pick-up points, in some cases equipped with their own changing rooms, will encourage more shoppers to turn to the internet for their clothing purchases.”

These alternative delivery methods have huge potential. According to research by ecommerce solutions provider Venda, almost three quarters (73%) of people in the UK have yet to use an alternative delivery method such as Amazon Locker and Collect+. This is mainly due to lack of awareness. However, of the one in five people (22%) that have used such an alternative delivery method, 62% said they would do so again.

Retailers also need to pay more attention to packaging itself, argues Donna Lynch, packaging director at MacFarlane Packaging: “One of the most common packaging mistakes made by fashion companies includes inadequate packaging that doesn’t ‘wow’ the customer when they receive their item, or reflect the brand’s identity adequately. Packaging can be used to a fashion company’s advantage to create a positive experience, through ingenious, attractive or reus-able design.”

The industry is adjusting to the new ways consumers shop, and only those that do this successfully will retain and grow their customer base.

‘The rise of alternative pick-up points will encourage more shoppers to turn to the internet for clothing purchases’Natalie Berg, global research director, Planet Retail

CUSTOMER DELIVERIES

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POINT OF NO RETURNCustomer returns are a major headache for retailers both logistically and financially, but there are methods of reducing them that can deliver big savings to the bottom line Words by SIMON BROOKE Illustration by FRANCESCO BONGIORNI

DEALING WITH RETURNS

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W hile sales on many high streets have stalled, the continued ascent of ecommerce has boosted many a retailer’s bank

balance. However, it has brought with it a rapid increase in returns. As it is difficult to predict when returns will come in, they play havoc with retailers’ financial forecasting and then have to be reprocessed back into stock if possible, marked down, or in many cases written off.

Returns from websites and stores cost the clothing sector £20bn in 2013, according to etail trade body IMRG. Meanwhile, research published by financial services company Credit Suisse in

2013 suggests that during January around 40% of all clothing bought online is returned. Asos chief executive Nick Robertson told Reuters last year that 1% fewer returns would add £10m to the company’s bottom line.

More worrying still is the lack of visibility and data for both online and store-bought returns. According to research carried out by consultancy eCommera this year, although 10% of retailers surveyed said they take inventory into account when prioritising their actions just 2% had reducing returns as a KPI – demonstrating how few prioritise this area. When asked to rate each area of the business, only 46% of respondents

agreed it is important to have visibility of returns, compared with 83% who thought visibility is key for marketing and 85% who said the same for merchandising. This could suggest a failure for some businesses to prioritise data on returns.

“Up to 50% of retailers’ returns are caused by just 10% of their products and this returned stock can lose a percentage of its value,” says Vicky Brock, chief executive of returns data provider Clear Returns. Clear Returns/IMRG research also shows that about 0.5% of customers are responsible for around 10% of returns costs. It’s essential, she says, to recognise the ‘toxic’ prod-ucts that drive disproportionate levels of

returns, not just of the products themselves but of other items in the basket. In store it’s much easier to handle returns. “Online returns involve higher costs,” she points out. “Returns will very often sit in the corner of the warehouse because outbound almost always takes preference.”

That said, she points out that in a competitive market retailers feel obliged to offer a generous, easy returns policy. The 2013 UPS/Comscore Pulse Of The Online Shopper study revealed that 74% of purchase decisions are influenced by the returns policy of the online store. If a retailer has an easy returns policy, 67% of consumers will shop more with it.

THIS EASE OF RETURN is also encouraging consumers to buy and try at home. “People are increasingly using their homes as a changing room,” says Brock. “This isn’t just the case for online sales, it’s also increasingly happening in store.” Other drivers of returns can include promotions. “Something such as ‘spend some-thing to get X’ sends returns through the roof.”

Logistics and distribution companies are responding to the growth of returns. For example, logistics provider Clipper, which counts Arcadia, Asos and New Look among its customers, launched Boomerang last May. The service outsources the processing of returns by repairing, pressing, repackaging and relabelling goods.

More accurate data and better communications between departments are also important, according to Kevin Sternckert, chief marketing officer of eCommera. “A common challenge is to connect decisions in one department with the impact to another,” he says. “One of our customers, a luxury retailer, had a dress priced at around £1,600 that was hugely popular and about to sell out, and the buyer believed they needed to order more stock. When they looked at the data from our

solution that links inventory and returns, they real-ised that the sales spike was immediately followed by a return rate of nearly 70%.”

Ensuring products are portrayed faithfully and described accurately in copy together with large, clear photography and, where possible, video, is key to reducing returns. Brock also advises against over-promoting a product with the result that it will only disappoint the customer and lead to a return. But the most frequently quoted reason for a return is size – if it doesn’t fit, it will almost certainly go back.

Retailers that handle a variety of brands face particular challenges with accurate sizing. Outsize men’s clothing retailer High & Mighty, for instance, has a guide that divides customers into “high,” in other words tall, and “mighty” for stockier or bulkier types to indicate what sizes they should be looking for.

“The ranges include a guide on height, sleeve length, chest, body fit, waist and leg length,” says High & Mighty menswear buyer Lucy Chaplin. “Size guides are available for each brand as fits may vary slightly between them and we want to ensure the customer understands this before purchasing online. We also include detail shots to show close-ups of fabrics and trims.”

HotSquash, a women’s casualwear brand whose stockists include House of Fraser and Debenhams among others, constantly monitors customer comment on sizes and adjusts labelling and garments accordingly. “We’ve appointed a new garment technologist who’s working hard to refit any of our designs that are coming back with high return rates,” says founder Darren Sidnick.

“We’re extremely careful in our web descrip-tions and will always update them if we feel a garment is coming up snug or will advise customers to size down if it’s generous. We’re always looking at customer feedback, so if they say the sleeve is a little short we’ll refine it for the next production run, for example.

“It’s interesting for us as we sell across multiple channels to compare different return rates and reasons. Our back-office systems can analyse the channels in depth to see if there’s a trend that we can then feed back into our production cycle.”

Cyclewear brand Fat Lad At The Back, which was founded last year and whose products are

now available through Evans Cycles stores, has rethought the traditional language of sports-wear sizing.

“We’ve changed the way we size our garments from similar sportswear, dispensing with the typical S, M, L and XL sizing and instead we use sizing in inches, more commonly associated with gents tailored clothing than in cycling gear,” says co-founder Richard Bye. “We strongly recom-mend our customers get measured prior to ordering anything and we’ve found that this gives customers a much more realistic expectation about the actual size and fit of our garments.”

Mannequin and fit specialist Alvanon – whose clients include All Saints, Ralph Lauren and Primark – says it has amassed the world’s largest database of body scan research, which it uses to help retailers align their sizes with those of their customers by giving them data for their pattern blocks. It has recently been working in South Africa, a relatively under-researched country, where customers in shopping centres have volun-teered to be scanned in its machines.

Alvanon president Edward Gribbin points out that there is a difference between “size” and “fit”. “A customer might select the right or wrong size but fit is more complicated,” he says. Retailers need to make this distinction and explain issues such as a slim or fuller fit clearly to their customers online.

“A product is never going to fit everyone but we can get to a more accurate standard, whether it’s a relaxed or a slim fit.”

The company has worked with Nike to create an Asian and Western fit. As well as worldwide variations within Europe it has created blocks that take into account the fact that the Dutch are the tallest nation while the Italians are the shortest. Gribbin believes more accurate sizing will reduce returns.

Achieving a reduction will be an uphill struggle, but with some of these measures in place retailers could surmount this ongoing challenge.

‘We’re always looking at feedback, so if customers say the sleeve is a little short we’ll refine it for the next run’Darren Sidnick, founder, HotSquash

DEALING WITH RETURNS

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A BIRD’S EYE VIEWWithout a real-time integrated view of stock, fashion retailers could be selling themselves – and their customers – shortWords by SIMON BROOKE Illustration by FRANCESCO BONGIORNI

STOCK ACCURACY

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W ith retailers now needing to serve consumers across multiple channels, stock accu-racy is crucial to meet shoppers’

expectations. To do so, a single view of all stock is required – but this is not always easy to achieve.

According to research published last year by enterprise technology consultants Redwood Soft-ware, 66% of consumers said they had terminated an online purchase because of a lack of stock – as retailers without a real-time view risk under- or overselling and leaving the customer waiting – while 44% expressed annoyance at having to wait in store while a sales assistant checked availability.

“The increasing use of marketplaces such as eBay, Amazon and [French mail order company] LaRedoute by retailers has complicated the issue of stock accuracy by adding another channel and link in the supply chain,” says Greg Zemor, founder of online marketplace management system Neteven, whose clients include Urban Outfitters, Spanish footwear brand Camper and womenswear brand Yumi. “Cross-border sales are another complication.”

He points to the need for stock measurement to take into account the whole stock lifecycle including packing, shipping and returns, espe-cially when returns could be arriving from different sites: “Companies need end-to-end integration and it must be seamless.”

A lack of up-to-date data on websites can result in customers finding that items they’ve chosen are unavailable. Deri Jones – chief executive of SciVisum, a consultancy that monitors the customer journey through websites – warns this is a significant risk where a product comes in a wide variety of colours and sizes: “If the website doesn’t have a live stock feed, but a cached one, it can be hours old. Then, when products are low on stock, it’s possible for an item to go out of stock after an update, but the site database will still leave it visible [to customers] for some time.”

With the growth of omnichannel, co-ordina-tion and integration are essential for software systems controlling and measuring stock.

“Often, there’s a lack of data measured and shared across the different channels, meaning there’s a lack of insight into the overall inventory,” says Jonathan Pilbro, vice president of fashion at DHL Supply Chain. “For example, financial information tends to be kept separate from customer orders or online sales are tracked sepa-rately from mobile purchases. While it is impor-tant to see which channels are being used by customers, this siloed approach increases the difficulty of maintaining balanced inventories and meeting demand.”

John Hogan, director of software provider Real World Retail, agrees: “Streamlining actions across processes in the clothing sector can make things a lot easier and increase stock accuracy. It’s important that bookings, point-of-sale and transfers systems are integrated throughout the business and across locations so mistakes can be avoided. Just as pivotal is carrying out stocktake at least twice a year, or up to four times. Once you have the stocktake data, analyse and identify the reasons for variances and see if you can solve

these issues. It’s one thing to do a stocktake, but what you really need to do is learn from it.”

Up-to-date information is essential, he believes: “Having a tool set up so you can see your stock in real time is fundamental for any fashion or clothing company. It can help reduce theft and unrecorded sales, which are two big factors when it comes to stock inaccuracy.”

Neil Kinson, Redwood Software’s vice president for Europe, the Middle East and Africa, adds: “Stock replenishment was once handled on a daily or even weekly basis. As retailers fight to deliver a true omnichannel experience, the

main obstacle is that their systems don’t update informa-tion in real time. The customer demand for a continuous, unin-terrupted experience between store, online and call centre requires a fundamental change to the way companies operate.

“It’s not so much a case of stock being measured accurately, but rather having the right stock in the right place to fulfil demand. For fashion retailers, this is particularly pertinent during Sales. For most of our customers, the whole infrastructure of the business – from IT processes to warehouses – was built to serve a world that didn’t expect the instant gratification and seamless movement between channels we have today.”

He cites the example of Redwood customer French Connection, which needed accu-rate data on stock movement and margins. Traditionally two members of staff would work overnight to gather, collate and compare this data. Thanks to software supplied by Redwood in 2009, increased automation has eliminated the risks of manual data entry.

Stock and sales information is now current, with accurate business information reports. The soft-ware also co-ordinates ecommerce and retail stock pools to create a complete view of the available stock. The new system has provided French Connection “with a means for controlling every-thing effectively and efficiently, while giving us complete visibility into our core business,” according to IT director Claire Joel.

“As the whole retail experience is now a combi-nation of store and website, shoppers expect to be able to flip between the two seamlessly. We find many of our customers now provide exactly

that for their customers,” says Philip Moylan, sales and marketing manager at retail management hard-ware and software provider Eurostop. “More and more of our customers have fully integrated systems with live sales, enabling many of

them to share stock between bricks-and-mortar stores and their website.”

Eurostop client Jules B is a premium fashion retailer with boutiques spread across Newcastle, Cumbria and Cleveland as well as an online busi-ness. It recently moved its EPoS system over to a fully integrated stock management and head office system supplied by Eurostop. Now, auto-mated fulfilment across the business means online orders can be automatically sourced from those locations holding the most stock.

“Additionally, if an internet order comes in that the warehouse cannot fulfil but a store can,

the system automatically sends a fulfilment plan to that store,” says Jules B head of ecom-merce Tom Jeffrey.

“The fulfilment solution takes into account branches local to our warehouse, and that enables us to move stock seamlessly from those branches to the warehouse to be dispatched. As well as helping us streamline stock management and provide a better service to our customers, this also saves on postage costs.”

As well as omnichannel, the growth of overseas trade through stores, concessions and franchises presents new challenges for stock measurement.

Alan Morris, executive chairman of retail tech-nology company Retail Assist, says: “Different operational formats can mean the retailer is running a number of IT and inventory systems that don’t ‘talk’ to each other or provide a single inte-grated picture of stock status.”

Retail Assist is experiencing demand for its software that links stock data from a variety of different sources. One client is lifestyle retailer Cath Kidston, which operates around 70 stores and concessions in the UK, Ireland, Europe and the Far East.

“We have partners who all work their own way and have their own systems and information,” says Cath Kidston IT director Mike Padfield. “Histori-cally, top-line data was being sent to us in spread-sheets or emails. [Retail Assist’s software] now translates the disparate systems into a single format. We then feed it into our data warehouse and use that as a basis for reporting. It makes for a more efficient and effective way of working.”

The challenges around effective stock manage-ment are increasing, but technology offers solu-tions in the form of real-time stock management and integration across different channels for those retailers and manufacturers willing to do their research and invest.

‘There’s often a lack of data measured across channels, meaning a lack of insight into total inventory’Jonathan Pilbro, vice president of fashion at DHL Supply Chain

STOCK ACCURACY

Drapers Supply Chain Report / JULY 2014 7

BRINGING IT HOME

There are, however, major cost-related issues with sourcing in the UK. Workers on the minimum wage in Britain earn £252.40 for a 40-hour week, which amounts to just over £1,000 a month. The minimum wage per month in China’s capital Beijing was RMB1,400 (£131.70) in 2013, according to the China Labour Bulletin, and can be much lower in rural provinces. Despite talk of wages increasing at an average rate of 13% per year in China, the levels are still very low compared with the UK.

Association show sales across the British cloth- and garment-making industry surged 20% in the past four years to £11.5bn.

Movements such as Reshore UK have also galvanised the sector. Part of the Manufacturing Advice Service and funded by the government’s Department for Business, Innovation & Skills, it aims to help companies take advantage of the business opportunities created through reshoring by offering expert strategic advice and providing access to funding to encourage it.

A s transport and labour costs steadily rise in core manufacturing locations across the Far East and India, the once unbeatable cost benefit of

producing there is beginning to erode in the face of increased demand for local suppliers who can provide speed to market.

This, combined with a genuine appetite for Made in Britain products, has led to a promising revival of the British textile manufacturing industry. Figures from the UK Fashion & Textile

With speed to market required like never before, demand for UK manufacturing is on the rise

Words by MANFREDA CAVAZZA Illustration by FRANCESCO BONGIORNI

BRITISH MANUFACTURING

Drapers Supply Chain Report / JULY 2014 8

Property is also more expensive in Britain. Finding the space to open a factory can often be time consuming and costly, and the lack of investment in manufacturing over the years has led to a deteriora-tion in standards of machinery.

And yet there are plenty of people who advocate sourcing in the UK. Jenny Holloway, director of social enterprise Fashion Enter, is one of them. Fashion Enter operates a 7,500 sq ft factory in Haringey, north London, which produces more than 7,500 units per week for the likes of Marks & Spencer, John Lewis and Asos.

“People have this view that UK fashion manufacturing is very niche, but we can produce big runs of product,” she says.

Holloway argues manufacturing in the UK is much more risk averse than going overseas as there are no transport costs, no need to send buyers to far-flung places, no lengthy stays in expensive hotels and lead times are much quicker.

A MAJOR PROBLEM, however, is finding skilled staff. Of Fashion Enter’s 48 machinists, not one is British. Most come from China or Eastern Europe. They are all entitled to work in the UK, but Holloway says it is a shame it is so difficult to find British staff.

“We have lost a generation of skilled workers,” she points out. By supporting schemes such as the Fashion & Textile Apprenticeship and Fashion Enter’s own Stitching Academy, funded by charity Asos Foundation and the Department of Work & Pensions and run at the factory in Haringey, she hopes a new generation can be encouraged to develop careers in fashion production.

Alvanon, specialists in mannequins and tools to help the industry design better-fitting clothes, is working with Fashion Enter and a number of British universities on re-skilling the manufac-turing base to bring sourcing back to the UK. As well as providing technical tools and expertise to educational establishments, it sells design tools to British retailers including Tesco, Debenhams, Joules and Next.

Alvanon president Edward Gribbin says: “Everyone wants to be a designer. We need to make the technical roles just as exciting.”

Handbag manufacturer British Bag Makers is a rare example of a company that has combined

large-scale production with hand-crafted luxury. Founded in 1994, around 20% of sales are gener-ated from its own-label Liz Cox bags, available from its boutique in Bath and at www.lizcox.com. The remaining 80% come from making bags for retailers such as Jaeger, Dunhill and Mulberry. It operates a 12,500 sq ft factory in Bath and can produce between 600 to 700 bags per week.

Co-founder Andrew Cater says his biggest obstacle is convincing clients it is possible to mass produce in the UK: “It is so rare, so unusual to find a manufacturing solution in this country that is price competitive – but we can do it.”

He claims British Bag Makers is as competitive as any of the European luxury handbag manu-

facturers, with the added benefit that bags are 100% handcrafted in the UK, often using British leather. Other advantages include being able to respond to trends much faster.

This view is echoed by Andy Gadsden, brand

manager of JuJu, makers of jelly shoes and chil-dren’s wellington boots. Founded in Northampton in the 1980s, it has been manufacturing shoes in the same factory for over 25 years.

“Having our offices and factory within the same building encourages a tight-knit network and enables us to maintain our high level of quality across sampling and production,” Gadsden says. “Our UK customers also benefit from short lead times and our ability to offer in-season reorders.”

The materials used for the jelly mix are sourced in England and are recyclable, which goes down well with consumers, he adds.

While the groundswell of support for British fashion manufacturing is hard to ignore, many in the industry are sceptical of the UK’s ability to compete against the large-scale production capabilities of Eastern Europe and the Far East.

Lifestyle retailer Quba & Co was founded in Salcombe, Devon, in 1996 by keen sailors Jim Hartley and William Bees.

The duo hired Di Bailey-Lewis – now its head of UK production – as a seamstress and made jackets, bags and home furnishings such as bean bags and deck chairs out of recycled sail cloth.

Co-founder Jim Hartley says the range produced in the UK is the most important part of the business, although it only accounts for 10% of total sales. The rest of the range is made overseas, in locations including China, India, Pakistan, Portugal and Turkey, at a lower cost but inspired by the core product made in Britain.

He explains: “Our UK business is not loss-making, but the margins

are lower. It would not be commercially viable to make the whole of our range in the UK.”

Despite this, the company’s ethos and branding is very much rooted in its Devon heritage, Hartley says: “Everything we make out of our sail loft in Salcombe is hand-crafted and unique. It is what gives us the edge on our competitors.”

ANOTHER BENEFIT IS the rise in demand for British brands, especially from countries such as the US, Japan and Scandinavia, he adds: “We’re looking to expand overseas so it’s important that we maintain some production in the UK. That is what people want.”

Having a manufacturing base in the UK also allows Quba & Co to test new designs by making just a few items and gauging the market reaction. Other advantages include not having to deal with the rules and regulations of foreign countries, quicker lead times and a lower carbon footprint.

Jigsaw is another fashion business proud to manufacture some of its ranges in the UK, espe-cially in its menswear collection. It sources tweed from Linton Tweeds in Carlisle, wool from Abraham Moon & Sons in Yorkshire and shoes from manufacturers in Northampton.

However, chief executive Peter Ruis says the UK will never be able to offer large-scale produc-tion as the costs are simply too prohibitive: “We use small designer units to make something special and unique for us, but it is quite hard to find a unit that will do a big run.”

Now is certainly an interesting time to be a British fashion manufacturer. There are plenty of UK firms that are quietly – and successfully – responding to the demand from shoppers for items sourced and made on these shores. As long as the price is right, the business is there.

‘It is so rare to find a manufacturing solution in this country that is price competitive – but we can do it’Andrew Cater, co-founder, British Bag Makers

BRITISH MANUFACTURING

Drapers Supply Chain Report / JULY 2014 9

ROUNDTABLE

ONE STOCK SHOP

Drapers Supply Chain Report / JULY 2014 10

A single view of stock is needed to streamline the supply chain and future-proof businesses, but our latest roundtable found that achieving this may be more difficult than it appears

Words by KEELY STOCKER Photography by PHIL WEEDON

With multichannel retail putting pressures on businesses like never before, there is a wide-spread focus on the supply chain

as companies ready themselves for future growth.Delegates from Topshop owner Arcadia Group,

young fashion chain Blue Inc and menswear retailer Moss Bros gathered at Charlotte Street Hotel in London for Drapers’ latest roundtable. Organised in association with returns analysis firm Clear Returns, attendees discussed the challenges faced when it comes to logistics and the supply chain. Discussions kicked off around whether or not retailers should be offering a suite of delivery options, and how this can be managed to ensure the processes match customer expectations.

Ian Kemp-Potter, head of logistics at Arcadia, said retailers need to find a balance in the number of options they offer versus the cost to them-selves: “For us, it’s about treading the fine line between offering customers the options they want and understanding that they don’t want to pay extra for them.”

Ajay Nassa, head of ecommerce at Blue Inc, agreed. He said the delivery option that has had the biggest affect for the retailer was the introduc-tion of click-and-collect: “[It] had a phenomenal response and was an overnight success.”

However, he warned that offering this option for free next-day delivery can be very expensive. The room was unanimous that the ideal solution for click-and-collect is to offer the standard delivery option for free but charge a premium rate for next day in order to balance cost and customer satisfaction. The success of click-and-collect has resulted in Blue Inc looking at how it can extend the service – to out-of-store hours, for example.

Kemp-Potter pointed out that not only does the quantity of delivery options matter, but retailers must ensure what is offered is actually delivered: “The vital thing is to stay true to every-

thing you offer. If you make a promise to the customer, you have to get it right.”

Liz Horne, web operations manager at Moss Bros, echoed this: “The most damaging thing is when you don’t meet that promise – people get very vocal about it. You have to remember: if a customer gets good service they tell one person, if they get bad service they tell 10.” And with the rise of social

media in the last few years, this can potentially turn into thousands.

CUSTOMER EXPECTATIONS HAVE also changed with regards to delivery, increasing the demand for continuous information. Nassa said: “Previously, customers were happy with just a confirmation of order. They now expect a full tracking of the item from initial order to final delivery.”

Vicky Brock, chief executive of Clear Returns, said this was something she saw first-hand

Those attending were: Vicky Brock, chief executive, Clear Returns; Lynn Connelly, sales manager, Clear Returns; Liz Horne, web operations manager, Moss Bros; Ian Kemp-Potter, head of logistics, Arcadia; James, Knowles, features and special reports editor Drapers; Ajay Nassa, head of ecommerce, Blue Inc; Keely Stocker, acting deputy editor, Drapers

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when visiting a customer call centre recently: “About 75% to 80% of the calls coming in were about parcels that [at the time] weren’t yet late.”

To avoid these calls, Kemp-Potter said it is vital to keep customers up to date throughout the supply chain journey, as when you do “they are much more relaxed about it”.

While retailers often think they have ticked all of the boxes, customer perception can be quite different. Kemp-Potter cited an example of a customer who orders something on standard delivery on a Friday, but may not receive the parcel until later the following week because the weekend is in between.

“The customer won’t always think: ‘Now, what day did I order that on?’ It’s about putting yourself in the place of the customer,” he said.

In order to address this, Arcadia is looking at how it can have continuous activity over a seven-day period and is toying with the idea of Sunday delivery.

Clear Returns sales manager Lynn Connelly believes keeping customers up to date is vital when something has not gone as originally planned: “Even if it is not what they want to hear, as long as the information is clear and informative it is hard for customers to argue against. They know that as a business you are being completely open with them and it builds trust in you to be that way in the future.”

Recently other click-and-collect delivery methods, such as to lockers or pods, have been much talked about in the industry – but the group was not convinced these were the solution.

Horne believes they may only work in certain geographical locations: “I wonder how London-centric this option is. It’s easy to see how this can fit into the hectic lifestyle of a Londoner on their way home via the tube or major train station, but I’m not sure how relevant they are for the rest of the UK.”

Kemp-Potter said Arcadia is concentrating on exploring the collect-in-store possibilities before it starts to use third-party options.

ANOTHER HOT TOPIC in supply chains is how to reduce returns, and whether or not this should begin at the online stage with added technologies such as 360-degree imagery.

Brock warned that retailers first need to focus on getting the basics right. While everyone agreed product descriptions should be detailed, she highlighted the need to also make them clear: “On a high-end site, if man-made products are described as anything other than what they actu-ally are, the return rates will be higher. It’s about being clear and informative.”

Kemp-Potter agreed: “Even simple things like adding the height and size of the model can make a real difference.”

ROUNDTABLE

To streamline the entire supply chain process, a single view of stock – which includes store stock – is essential, but everyone admitted they hadn’t quite achieved this yet.

Nassa said: “We do a weekly sweep of stock in store, but it is not real time – it’s too fast to control.”

Kemp-Potter said Arcadia is undergoing a three-year plan, due to finish in 2017, which it hopes will bring it closer to a single-stock view.

It’s clear that there are a number of different factors that need to be explored to ensure busi-nesses’ supply chains are efficient, from the point of sale on site to the delivery pick-up method.

As retailers strive to ready themselves for future growth, it is vital they achieve a single-stock view to ensure they meet customer expec-tations and demands.

Drapers Supply Chain Report / JULY 2014 11

‘You have to remember, if a customer gets good service they tell one person, if they get bad service they tell 10’Liz Horne, web operations manager, Moss Bros

Supply and demand: (clockwise from top left) Liz Horne, Lynn Connelly and Ian Kemp-Potter, Ajay Nassa, Vicky Brock and Lynn Connelly

‘Even simple things like adding the height and size of the model can make a real difference to return rates’Ian Kemp-Potter, head of logistics, Arcadia Group

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