Big Interview: Hilary Devey

A household name for her role on BBC's Dragons Den, entrepreneur Hilary Devey is also founder and CEO of European palletised freight network Pall-Ex, which operates alongside retail businesses such as Asda and L'Occitane through its Retail Plus+ service.

Essential Retail asked Devey some questions on the current state of the retail industry, the importance of logistics and how new technologies are shaping the current business landscape.

How would you define the perfect logistics experience in the modern retail world?

In many ways, logistics for a retailer is a necessary evil and the reality is that the perfect experience is to not actually be aware it's happening.

Think of it like a car engine where all of the work goes on under the bonnet. For most drivers, all they care about is that when they put in the fuel and turn the key, the engine operates in a smooth and effortless way. They don't tend to concern themselves too much about the actual workings.

The same can be said for retailers. They want deliveries on time and on budget, and as a logistics provider, it's up to us to ensure that happens.

What do you find are the main requirements from UK retailers, at present?

Retailers are now looking to logistic service providers to develop total supply chain solutions. This is because the world of business is shrinking and more retailers are looking beyond the domestic market to get the best deals and remain competitive.

Access to suppliers in different countries is becoming easier and, having sourced their products, retailers need to get them to the store or to the eCommerce consumer in the most efficient way possible.

Pall-Ex was founded in 1996 to react to the need for 'just in time' logistics, which in the retail sector helps with stock overflow reduction and stock room space management in store.

Today, it's more about demand chain and customer experience.

Retailers need to react quickly to customer demands and environmental influences. For example, if it's going to be hot weather at the weekend, they need to ensure they have all BBQ related items fully stocked in the bricks and mortar store and a flexible and fast delivery solution for eCommerce shoppers.

Flexibility is also a major requirement, with retailers looking for solutions that offer timed deliveries into outlets and deliveries outside of trading hours. Each store often has different needs and demands, and the bespoke approach is certainly favoured, with different delivery and collection solutions required for each individual outlet. 

What examples can you give of new technologies being introduced to the Pall-Ex business in the last couple of years?

The introduction of the Transport and Warehouse Information Network Environment (TWINE) IT management system has been huge for us.

TWINE allows both members and customers to manage their own shipments as well as Pall-Ex consignments in real-time. Advanced users can also bolt on a host of back office functions including finance, HR, warehouse, and CRM solutions.

The real-time nature of the system has helped to streamline hub and depot operations, helping to reduce labour costs for many members in the process, which in turn can be passed on to customers, including retailers. 

The system also safely stores centralised data, which allows it to be used to greater effect across the network. The strategic nature of the data is helping to win new contracts, worth in excess of £1 million.

From a network point of view, it has facilitated the use of the latest technology. Motorola ES400 PDA devices are used by all drivers. Consignments are scanned at the delivery point and, along with proof of delivery, the data is transmitted in real-time to TWINE using 3G mobile technology.

This scan data compliments the already detailed depot and hub location scanning, helping to avoid discrepancies, boost efficiency and provide complete transparency of a consignment’s journey through the network as it happens.

How has the big shift to online retail and mobile commerce in recent years impacted Pall-Ex?

If I'm honest, I think the main impact of this shift is still to come for us. On the whole, our products tend to still be mainly B2B due to the size of the minimum product that can be carried on a pallet. That being said, we are starting to see a small increase in B2C deliveries. Interestingly, that increase is mainly coming from the consumer DIY market, with items such as turf and aggregates. We seem to have a lot of budding gardeners on our hands at the moment!

What are your thoughts on online track and trace and its impact on the wider retail industry?

For the online retailer, track and trace dramatically increases customer revisits, making their site 'sticky'. It encourages the shopper to return to track their goods. Once back on the site, the online retailer has the opportunity to up-sell additional products based on the consumer's buying profile.

For bricks and mortar operations, there are a variety of smart ways to exploit track and trace data to improve efficiencies across the business, ranging from improved inbound planning at DCs, all the way down stream to faster processing of vendor invoices.

The key enabler to realise the maximum efficiency is the full integration of this data into the retailer's core operational systems. With new web technologies, like those we have developed TWINE in, this will, and has, become a very quick win for retailers.

Pall-Ex has a presence across Europe. How do retailers' delivery requirements change per country?

We're well on our way to being a full pan-European network, with active operations in the UK, France, Italy, Spain, Portugal, Romania and Poland. All of our European networks replicate the UK model, but there are of course regional variations when it comes to dealing with customers in the retail sector.

We would be here all day if we went through the different requirements of each country, so let's take Romania as an example.

Most retailers here are still taking deliveries at each store door. There are one or two that operate central distribution centres, but on the whole, most deliveries are still at store level.

Romanian retailers try to operate a booking window system, but due to uncertain transit times and unreliable service levels (delivery times and quantity fulfilment), this has resulted in limited success. However, I believe that in time, more disciplines and good practice will be put in place.

There's also quite a lot of frustration surrounding store reception, which is still done at piece level by detailed counting of the product on every pallet. This takes quite a long time and delays the inbound process. It's not unusual to see long queues of supplier vehicles at the back door of a store.

The Romanian market is also heavy on documentation, so items such as packing lists, supplier advice notes, CMR, quality and conformity certificates are all required.

Which retailers do you see as the leaders in fulfilment?

Fashion retailer Zara has one of the most agile supply chains around. They've very much bucked the industry trend and done their own thing, which I admire as it's something I did when I set up Pall-Ex. 

So, whilst most fashion retailers commit six months in advance to up to 60% of their seasonal lines, Zara only locks down between 15-25%. By the start of each season, only 50-60% of the line is finalised, compared to 80% for most other retailers. This means up to 50% of its clothes are designed and manufactured bang in the middle of each season.

This is actually quite savvy as it means they can react quickly to any unexpected trends, and most importantly, to what consumers are buying. This reduces the risk of surplus stock at the end of each season and having to dramatically reduce the cost of garments just to get rid of them.

It can take just 10 to 15 days for clothes to go from the design stage to appearing on the shop floor and that's because the supply chain is so streamlined and planned out. So, because production facilities are so close to Zara's distribution headquarters, products can be shipped more often and in smaller batches, which means new styles can hit stores up to twice a week.

It's impressive stuff.

Which retailers do you shop with?

One of the benefits about living between London and the Midlands, as well as regularly travelling for work, is that I get to shop at a number of retailers: from large and established brands such as Harrods and M&S, to niche stores and boutiques.

I try to keep an open mind, and though I have firm favourites, I still try to mix it up and regularly try out new food, furniture and fashion stores.

For me the retail experience is more than just what you walk out with in the bags or have in your online basket at checkout. Good and reliable service, availability of relevant information, as well as post-sale customer support, are integral parts of the overall customer retail experience.

What major changes in the retail supply chain do you foresee in the year ahead?

We will continue to see a decline in high street sales because of the online shift, but I think this will be at a slower rate. ECommerce will inevitably continue to increase, but it will level out slightly as it gains overall share of the market and the high street get to grips with tackling their issues of cost.

I think the way consumers use high street stores will see a notable shift too. Instead of buying at an outlet, they will become a try before you buy destination. The smart retailers will extend their provision to the bespoking of products at the fulfilment centre rather than keeping large numbers of various different sizes or shapes in stock. Delivery will be next day either to home, click and collect or drop box.

Logistics providers will inevitably have to adapt their offerings accordingly, but that is nothing new. Flexibility and adapting to market demands is the key to survival in logistics. It's those who aren’t prepared to change that will take the biggest hit.