Logistics Property Main Feature
Delivery man: Yodel’s Chief Executive, Jonathan Smith.
“It’s a difficult market in which to offload warehouses, but the process is going ok”
Brother beyond: The Barclay twins, owners of Yodel.
Parcels growth
buildings, bad buildings and simply aver- age buildings they are offloading.“ Other close observers guess that the strategy appears to be to dispose of units with short-leases – typically under five years – which are the least attractive to occupi- ers, and least useful on the balance sheet. The parcels business – owned by publicity- shy tycoons Sir David and Sir Frederick Barclay – has remained tightlipped about its strategy. A company spokesman said: “I’m afraid that the strategy going forward is confidential, but you’ll note that the surplus units are being snapped up quite quickly.” Today it is estimated that around one-
quarter of the 45 Yodel units are either disposed of or have deals in solicitors’ hands. Chris Kershaw, partner at Birming- ham surveyors Gerald Eve, is advising Yodel on the sell-off. He says: “It’s a dif- ficult market in which to offload ware- houses, but the process is going ok. “The kind of changes we’re seeing at
Yodel are going to become more frequent because the parcels business is chang- ing. It is already highly competitive, but the growth of internet retail has made the delivery firms even more cost aware, and property is a high proportion of their costs.” Yodel still has a long way to go to make a profit (see side panel), but cut- ting its £28m a year rent bill by even a few million will make the journey to profitability just that little bit shorter. n
Internet shopping is already transforming the UK’s £4bn-plus parcels business. Research by surveyors CBRE says that the United Kingdom is the world’s third most developed online marketplace.
Today the vast majority of retailers surveyed (80%) have an online browsing catalogue. Luxury & Business (92%) and Value & Denim (87%) retailers are most likely to provide online catalogues.
Around 44% of of UK retailers can deliver goods bought online. The CBRE research found that the Value & Denim sector is most likely to have an online delivery service in the UK – with 65% of retailers in this category providing online ‘buy and deliver’. This is followed by Luxury & Business (56%), Specialist Clothing (51%) and Mid-Range Fashion (46%).
Peter Gold, head of European retail at CBRE, explains: “Given this, it’s not surprising that the Royal Mail expects its business to be increasingly driven by online shopping in the coming years, while Yodel – the UK’s largest parcel delivery company – has moved to change its service offering in the light of a dramatically growing e-commerce business and a huge increase in volumes around the Christmas period.”
Recent figures from Boston Consulting Group suggest internet retail accounted for £121bn, roughly equivalent to 8.3% of the UK’s total economic output. It is expected to double in the next five years.
Yodel model
Yodel is reconfiguring its business for the digital age. The parcels business, which controls around one- fifth of the UK parcels sector, says it is moving to a six-day-a-week service to meet customer expectations for internet shopping.
More seasonal staff and a new timed delivery service, along with an extension to the Collect Plus parcels collection point service, are proposed.
“We’ve reviewed our performance,
consumer demand and responded,” commented Yodel’s CEO, Jonathan
Smith. “As the
listened to internet
shopping market grows so do the demands on our service. With online promotions and peak periods on a weekly and seasonal basis, we are increasingly required to flex, in some cases handling up to 11 times normal parcel volume, and this is a trend that is only set to increase.”
The changes will be phased in gradually during summer 2012 ready for completion in time for the Christmas rush.
www.shdlogistics.com Making it pay
Making a parcels business pay isn’t easy in the days of rising fuel prices – and offloading unwanted property is one way to cut costs.
Yodel is privately owned by the Barclay twins, David and Frederick, who also own The Daily Telegraph. It is fortunate that the brothers are said to have deep pockets, because Yodel has yet to make a profit.
The massive cost of two property networks is partly to blame: the firm’s rent bill rocketed from £11m in 2010 to £28m in 2011.
Accounts to the end of June 2011 showed a loss of £125m, sharply up on the £18m reported before the takeover of the UK business of DHL. However, topline turnover nearly doubled to £725m.
Yodel is not the only parcels firm with money worries. City Link has been a poor performer for its owner, Rentokil Initial. The parcels subsidiary lost another £12.7m in the three months to April, an increase of nearly one-fifth. Sub-contracting arrangements are said to be partly to blame for City Link’s woes.
Storage Handling Distribution June 2012 51
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