WAREHOUSING HANDLING & STORAGE
COULD YOUR AUTUMN PEAK BE RISKIER THAN USUAL? M
any retailers depend for their profits on the ‘golden quarter’ – the season running roughly from Halloween through to the January sales, and including, besides Christmas, Bonfire night, Black Friday and other excuses for conspicuous consumption. To meet demand, many businesses require space for warehousing, order picking and dispatch over and above their normal needs. Depending on the trade and the characteristics of the supply chain, the requirement may be short and sharp or more ‘shouldered’ over several months – and may be extended by the need to accommodate and process returns – but in a tight warehousing market companies will have to act now to secure the space they need. The coming season is more than usually difficult to predict and companies are reluctant to commit, lest the ‘golden quarter’ turns out to be fool’s gold. There are real uncertainties on the demand, supply and logistics sides of the equation. On the demand side, the ‘cost of living crisis’ is becoming a reality. Will this result in a general tightening of belts, or will consumers enjoy one last splurge? They could of course do both – cutting back on eating out, for example, reducing hospitality trade demand, but investing more in entertaining at home and thus buying more groceries. (Another unusual variable is the small matter of the football World Cup – if England
or Wales enjoy a good run this could have a significant impact on consumption patterns). Supply side problems are well known – the Ukrainian war, Chinese lockdowns hitting semiconductor (and many other) production lines, unusual weather impacting harvests, and logistics problems, at scales from international container shipping, through Channel port disruption, to internal factors from driver shortages, through fuel prices, to rail strikes. Predicting a company’s need for short-term space over the golden quarter, and then securing it, could be a nightmare. But we suggest a number of principles that businesses faced with this quandary should follow – and not just this year.
Firstly, it is almost never advisable to scale permanent warehousing and associated capacity for a single seasonal peak (although there are firms that have successive peaks, perhaps in different lines, for which this may not be true). But generally, the business is committing to a continuing expense which for much of the year is not producing a return.
Second, it’s vital that businesses contract for the right type of space. Storing pallet loads in a bulk store, or even in the container in the yard, may be reasonable when they arrive in August, but if they can’t be accessed to pick and dispatch on demand as the orders come in over
the Autumn, there are likely to be lost sales. Facilities that enable efficient, perhaps automated, picking and packing, are more costly so it’s sensible to restrict hiring these facilities to when they are needed, at peak. Thirdly, location is key. Bulk storage and distribution, perhaps somewhere in the Midlands, works very efficiently in times of normal, steady demand. At peaks, and especially when sales may be fashion or trend driven, a model which holds more stock closer to the end user, whether retail store or e-commerce consumer, may be much more appropriate. But again, this isn’t necessarily a facility that makes sense to operate all year round. Seriously high fuel costs, and driver shortages, are also impactful considerations in peak season distribution planning. Using an independent warehouse space consultancy that has extensive in-house expertise – and a wide network of contacts with available space – can pay significant dividends. An experienced, well-connected consultancy can help a business ‘right size’ its warehousing needs to meet seasonal patterns of supply and demand. Creating a flexible space strategy for a potentially difficult Autumn peak season is a great way to mitigate risk.
Bis Henderson Space
www.bis-hendersonspace.com
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