When the white stuff is not the right stuff

Loss prevention in its purest form is about eradicating margin erosion in every aspect of the business.

The loss of sales due to poor weather conditions is a case in point with the recent white-out creating a snow-go for profits.

So while Bing Crosby may have been wishing for a white one, the lyrics do not play out well with the retail community who have been experiencing the nightmare before Christmas thanks to the heavy falls of snow over recent days.

Retailers could be entering 2011 with even greyer skies because the busy pre-Christmas period has been fraught with both High Street and online frustrations, thanks to the weather.

With the prospect of an increase in VAT on January 4, shoppers being kept away from the stores because of snow and online deliveries not arriving in time for Christmas, was not the winter scene retailers were hoping for.

The warning signs have been there for a long time with the growth of online shopping and the increase in time and cash poor consumers who have got used to instant Internet fulfilment. When they are denied their presents because of a blanket of snow creating a back-log of millions of parcels, all hell breaks lose.

According to supply chain consultant Steve Smith of Manhattan Associates, retailers have to adapt to conditions both rain, snow and shine: “With millions of Christmas gifts stranded due to heavy snowfall, retailers need to take action to ensure their supply chains don’t become frozen by the harsh weather conditions, leaving customers disappointed and without the items they have paid for. In the era of multi-channel purchasing, suppliers and retailers must ensure they are properly prepared – whatever the weather – to deliver on customer promises. The increased volume of product orders during the festive season and extreme weather conditions presents huge challenges which can be tackled by having a flexible and agile supply chain.”

Carl Jackson, Head of Recovery at professional service company RSM Tenon believes that the snow may have created a last-minute opportunity for high street stores to maximise their profits as the Internet is found wanting, but at a huge cost to the business.

“If the weather eases there is an opportunity for the High Street as some internet retailers have had to stop deliveries on new orders due to their backlog. People don’t want to risk not having presents for Christmas and have braved the cold over the weekend to go shopping. However, retailers have increased volumes for the expected Christmas shopping spree at a huge cost to themselves. “With the terrible weather affecting the whole of the UK over what is normally the busiest weekend of the year, UK retailers will not only be down on sales but will have eaten into their margin for the Christmas period as well.” 

But even on the high Street, those margins have proved as slippery as the road surface as revealed by a new poll by HolidayExtras.com discovers that both call centre and high street shoppers just don’t have the time, or the patience to wait in line; and if they’re not served quickly enough they will walk away from the sale.

Nearly half of those surveyed, 44 per cent said they were only prepared to wait on the phone for one minute to process an order, and 67 per cent said that they would walk away if they waited more than five minutes in line at a till for their Christmas presents.

Men are more patient than women when it comes to buying Christmas presents, with 72 per cent of men being prepared to wait for up to five minutes in a till queue, 12 per cent more than their harassed female counterparts.

Ben Alexander, head of marketing for HolidayExtras.com, said: “Christmas shoppers have been hit this year by the appalling weather conditions, so they really don’t have the time to be waiting in line. Because time is tight, call centres, retailers and on line shopping sites need to keep sharp in order to help people to get everything that they need before Christmas. Our call centre is currently experiencing a 200% increase in call volume due to the snow and our aim is to answer 86% of our calls within 20 seconds.”

Lessons need to be learned in terms of supply chain suppleness and the ability to respond to whatever the weather throws at the retail community. Both online and High Street retailers will be entering 2011 having to take a fresh look at loss prevention and margin erosion caused by lack of preparedness and the fact that Christmas 2010 was marked by the galling spectacle of having to watch their profits drift like the snow that has blanketed most of the UK.