Standing in a giant warehouse on a grey October morning somewhere in the Midlands, it’s impossible to escape the uncomfortable feeling that Christmas won’t be very merry for shops this year.
From here, Henry Birch – chief executive of £2billion online retail giant The Very Group – is already shipping out a million parcels a week.
By the week of Black Friday at the end of November, that number will increase to 1.5million packed and loaded by more than 800 staff and 500 brand new robots – machines specifically designed to slash costs and cut the time it takes to get orders out of the door.
While the ring of high street tills feels increasingly hollow, Birch can say with unflinching certainty that he’s ready for his biggest festive season yet.
Sales at his Very.co.uk website rose 36 per cent in the three months to the end of June and demand has continued in ‘double digits’ since.
‘Tough call’: Henry Birch pressed on with the plan to set up one huge site
‘We see the strong trading continuing. We’re going into this with momentum and from a position of confidence. Our feeling is that we are going to have a record Black Friday and Christmas – stronger than we’ve ever had before.’
Many online firms are already calling it ‘Black November’ – a month of discounts and incentives for shoppers to buy early but, more critically, online.
Birch explains – for obvious reasons – that ‘consumer sentiment seems to be around staying away from the high street and shopping online’.
The smooth running of the warehouse is clearly bolstering that confidence. It was scheduled to go operational on the day Prime Minister Boris Johnson announced lockdown on March 23. The Very Group pushed ahead with the plan – beginning from a standing start meant it was easier to assimilate Covid-19 safety measures than at some rival operations – consolidating two existing warehouses in the North West to this one.
‘We had a tough call to make and we made a decision to go ahead,’ says Birch, whose group also owns the Littlewoods brand.
‘It was the right thing to do in retrospect. We’ve seen a huge sales growth since March and that’s been underpinned by having this place fully operational,’ he says.
Skygate, as the 850,000 sq ft warehouse is known, is the company’s shop floor, while the Very website is its shop window. It is strategically placed in the middle of the country, buttressed by East Midlands Airport on one side and the M1 motorway on the other.
Rail links, vastly improved efficiencies and its central location mean it has cut about a million miles from its transport budget. And, Birch is quick to point out, it has cut carbon emissions too.
Birch says the company – founded by Merseyside businessman and Littlewoods catalogue creator John Moores, after whom Liverpool’s second university is named – is absolutely ’embedded’ in Liverpool where its head office remains, adding that being in the region is a ‘competitive advantage’ with so many other online firms there. But the retreat from Shaw in Oldham and Little Hulton near Manchester was a painful one, described by one commentator on its announcement as ‘another dark day’ in UK retail but which insiders say was dealt with as sensitively as possible given the circumstances.
Birch, a diplomat’s son who previously ran William Hill’s online gambling business, acknowledges the sophisticated warehouse means he needs to employ around 1,000 fewer staff. The robots that have replaced the product pickers resemble kids’ ride-on sports cars – complete with neon headlights.
But the company sees automation as the key to success in an arms race in which smaller – or weaker – players in retail will increasingly struggle to compete.
In the warehouse is a machine that packs up 1,500 items an hour, with more to come following its initial success, and huge conveyor belts that pre-sort parcels rather than leaving the job to distribution firms on the outside.
‘We can go from receiving an order to getting it out of the door in 30 minutes. The speed of getting things in and out of here is impressive,’ he observes as we walk across the highest mezzanine. Previously, the process took four hours.
As a result of that, The Very Group will seek to dispatch orders immediately rather than, as many firms do on Black Friday, pushing out delivery promises by a week or more – a delay tactic that is employed in a desperate effort not to turn away trade during such unprecedented demand.
During lockdown, demand changed significantly. Very was shipping out 300 jacuzzis and spas each day at the peak of lockdown, dispatching them as quickly as they arrived in the warehouse, and fashion sales fell even though Birch says he managed to increase market share.
He adds some hope for clobbered fashion retailers: ‘We’re definitely seeing a recovery in fashion – whether people will decide that finally they want to treat themselves for Christmas Day or whenever they can meaningfully go out after that.’
But he says its ‘harder to call’ overall consumer spending beyond the further shift online.
‘Anecdotally, I think people are going to want to celebrate Christmas, treat their kids, and have something to look forward to. I think it feels like it will be a normal Christmas, if not a better Christmas in terms of overall trading.
‘I just think people are going to take more time planning and buying for Christmas this year. They’re going out less, sitting at home online. I think people have got more time on their hands.
‘They want something to look forward to and at the moment Christmas is something of a light at the end of the tunnel.’
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