Freight consolidation and remote storage

Transcription

1 Freight consolidation and remote storage

2 With retail centres under enormous pressure to maximise returns, FCCs offer a wide range of measurable improvements in terms of space savings, staff efficiency, access to goods, customer satisfaction, cost management and increased revenue. An impressive list! Detailed examples of FCC use at Meadowhall (Sheffield) and Broadmead (Bristol) are used in this report as a basis for analysis, with a range of case studies to illustrate the benefits, benchmarks and challenges that have a positive impact on the bottom line. I m pleased to present this thorough and eye-opening study offering practical suggestions for both centres and retailers. Martyn Chase President, BCSC and Chairman EMEA Retail, DTZ

3 Freight consolidation and remote storage Researched and written by Richard Jones and James Outterside, WSP Development and Transportation Acknowledgements WSP wishes to thank the BCSC Educational Trust for financing this study and Francis Ives of Cyril Sweett for his involvement on their behalf. BCSC has provided invaluable input during the course of the project and in an editorial role; thanks are extended to Marcus Kilby of Lunson Mitchenall for his involvement and to Davinder Jhamat of BCSC. The publication of the study was financed by BCSC. WSP would like to thank all those who contributed to the research through providing information and participating in interviews and discussions. WSP Development and Transportation, The Victoria, The Quays, Salford, Manchester M50 3SP t: f: w: ISBN WSP UK Ltd (2008) The text of this publication may not be reproduced nor may talks or lectures based on material contained within the document be given without the written consent of WSP. No responsibility for loss occasioned to any person acting or refraining from action as a result of the material included in this publication can be accepted by the authors or the publishers. Published by WSP Development and Transportation (WSP UK Ltd).

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5 contents 05 Executive summary 05 The principle of freight consolidation 05 The benefits to retailers 06 The benefits to shoppers 07 The benefits to centre developers and centre operators 07 The benefits to the environment SECTION ONE 09 Introduction 09 Background 09 Study aims 09 Consultation process 09 What is freight consolidation? 12 Selection of current examples SECTION TWO 15 What are the benefits to retailers? 15 Reduced on-site stockroom requirement 15 Delivery timing and flexibility 16 Flexible use for peak trading 16 Pre-retail options 17 Security and delivery tracking 17 Rural freight consolidation 18 Retailer feedback and testimonials SECTION THREE 21 What are the benefits to shoppers? 21 Increased retail offer and flexibility of ordering 21 Reduced vehicle movement 21 Customer collect by car SECTION FOUR 23 What are the benefits to shopping centre developers and operators? 23 Benefits in centre design and construction 24 Reallocation of service yard space 25 Waste and recyclable materials SECTION FIVE 27 Environmental benefits 27 Wider environmental benefits 27 Local environmental benefits 27 Waste and recycling SECTION SIX 29 Implementation of FCC schemes 29 Comparison of alternative existing models 31 Financial models 33 Potential challenges SECTION SEVEN 35 Conclusions 36 Sources

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7 Executive summary This document has been prepared to provide a summary of the principle of freight consolidation and to highlight the potential benefits, and challenges of implementing freight consolidation centre (FCC) schemes. This is outlined by studying the experiences of a number of stakeholders in the delivery and retail process, from shopping centre developers through to retailers and finally shoppers themselves. Further commentary is given on the financial aspects of implementing a successful FCC scheme and on the potential environmental benefits. THE PRINCIPLE OF FREIGHT CONSOLIDATION The concept of freight consolidation is that the number of service vehicle movements to and from a shopping centre is reduced by the operation of a FCC at a storage location remote from the shopping centre itself. A FCC is likely to take the form of a warehouse style facility, ideally located on the edge of a town or city with good road access to the shopping centre to be served, allowing goods to be forwarded easily from the FCC. Goods for a shopping centre are delivered by individual retailers to the FCC. These goods are then consolidated into cages or containers for forwarding to the retailer when required. This delivery service could take the form of smaller vans and lorries rather than heavy good vehicles (HGVs); potentially green vehicles, that would be loaded with goods for a number of retailers at the shopping centre. The van would then in effect run a shuttle service between the FCC and the shopping centre itself, unloading goods for a number of retailers at the appropriate service yard or retail unit. THE BENEFITS TO RETAILERS A FCC in its simplest form offers a remote stock storage facility to retailers, which although remote from the shop itself is sufficiently close to allow stock to be called up to the shop floor at short notice. This offers the retailer the chance to dramatically reduce its on-site stockroom requirements, and provides the opportunity to greatly increase retail floorspace within a given gross floor area. Examples of schemes in operation within the UK, such as at Meadowhall, Sheffield, have shown that large retail units of 10,000 sq ft or more can operate from an on-site stockroom of only some 1-2% of their total floor area, rather than the traditional 30% found in many retail units. on-site, a greater volume of items can be held in close proximity to the store. Much greater flexibility is offered to the retailer, in that a wide variety of goods can be held within a easy reach of the store (i.e. a FCC which can deliver several times a day as required). This is compared to the existing situation where only a limited range of goods can be held in on-site storerooms, with access to the wider range of goods limited to the times at which deliveries are made from regional and national distribution centres. While a FCC is termed remote storage, with appropriate stock control any combination of goods can be called up at short notice, certainly more quickly than from regional or national distribution centres. This means greater flexibility for the retailer in terms of delivery timing, with multiple deliveries per day. A number of retailers at various existing FCC schemes make use of the FCC on a seasonal basis. This can assist with shortterm peaks in storage and delivery requirements such as during Christmas, Easter, bank holiday weekends, and sales periods. FCCs can provide valuable storage opportunities in emergency situations. During the recent South Yorkshire flooding events, the Meadowhall FCC provided a resource for the retailers that were not able to use their on-site stockrooms. The additional floorspace can allow a marked increase in the retail offer, with many additional items available on the shop floor at any one time. Additionally, with the greater volume of storage space at a FCC in comparison to what would be possible BCSC Freight consolidation and remote storage 05

8 FCC schemes can offer a variety of pre-retail options to retailers, such as unpacking, sorting and labelling of goods, streamlining the process from the FCC to the shop floor. In addition to freeing space previously used for these activities within the shop, this process offers major savings in both staff time and staff morale, allowing retail staff to concentrate on their core sales duties while reducing time-consuming pre-retail work. Security and delivery tracking can be tailored to retailer s individual requirements, including individual secure storage areas if required. A number of relatively high value retailers such as mobile phone sellers use FCC operations within the UK, where very few security or shrinkage issues are reported. Security features within a FCC can include segregated areas dedicated to individual retailers, should this be required. Greater flexibility can be offered in making deliveries across areas with limited access, such as pedestrianised zones in town centres. A small number of FCC vehicles could cross the pedestrianised area during the day, using trained drivers familiar with the location and possibly green vehicles. This would impact less on the safety and environment for pedestrians than uncontrolled deliveries to stores, and could allow deliveries to retailers throughout the day which were previously time restricted to outside busy pedestrian hours. Retailer feedback from participating retailers in existing schemes has identified a number of key benefits. These have included greater flexibility in storage and delivery options, which have led to an increase in the amount of retail lines offered by retailers and to a corresponding increase in sales, in particular at times of heavy sales volumes. Retailers have benefited from additional retail space made available through the transfer of storage to a FCC, particularly when a move or refit allows a reorganisation of the internal layout of the store. This has again led to increased sales. Retailers have also benefited from the specific use of FCC s during high volume sales periods such as Christmas, when the FCC has allowed a greater volume of incoming stock to be received and again led to increased sales. While the use of a FCC can represent an additional cost in the delivery chain, it is important to note that this cost can be offset against the increased sales possible through the use of a FCC. Not only can the sales area increase within a store, but a greater range and quantity of stock can be carried as well. This is particularly true at times of high sales volumes where some traditional delivery and storage arrangements may suffer from a lack of capacity. These benefits can lead to increased sales. THE BENEFITS TO SHOPPERS Shoppers benefit from the increased retail offer when the retailer is able to provide a greater range of items from one store. Customer collect by car facilities can be offered by a greater number of retailers, who take advantage of the FCC as a collect by car point. This can ease the purchase of bulky goods which otherwise may need to be handled at the store itself. The facility can also serve to increase customer dwell time within a store or a centre, leaving added time for customers to manoeuvre cars in what is often a busy or complicated space. A key benefit is the reduced vehicle movement in and around shopping centres, which assists in the creation of a better pedestrian environment. This is particularly relevant to centres in urban areas, as a FCC can greatly reduce the instances of vehicles crossing heavily pedestrianised areas to access service yards. This has clear safety benefits, encouraging a better quality public realm within the shopping area. 06 Freight consolidation and remote storage BCSC

9 FCC schemes can also be implemented during the construction of a centre. When large quantities of materials from a number of suppliers are required on site, a consolidation scheme could reduce the number of construction vehicle movements to the site accordingly. THE BENEFITS TO CENTRE DEVELOPERS AND CENTRE OPERATORS Implementing a FCC in conjunction with a new retail scheme also achieves notable savings in construction and design costs. This is due to reduced vehicle movement to the on-site service yards. For example, a reduction of up to 75% for participating retailers in current UK schemes. This then reduces the requirement for service yard space within the new development. It is important to note that service yard space is frequently in short supply, particularly in constrained urban developments where it is often required to be hidden. Space savings will noticeably reduce design and construction costs on the service yard element of many new retail schemes. for storage uses or to relieve particular constraints such as difficult vehicle manoeuvres within the service yard. Alternative uses for released space have included environmental measures such as rainwater storage tanks for use as grey water within the centre. Service yard space can also be released by improvements in waste and recyclable material collection, which is possible with a FCC scheme. FCC vehicles that have unloaded at the shopping centre can then return to the FCC loaded with waste and recyclable material. FCC schemes can also be implemented during the construction of a centre. When large quantities of materials from a number of suppliers are required on-site, a consolidation scheme could reduce the number of construction vehicle movements to the site. THE BENEFITS TO THE ENVIRONMENT The principal environmental benefit of FCC is the reduced overall vehicle mileage, as a result of fewer delivery vehicle movements being made all the way into a town or city centre. Schemes in operation have already shown savings of upwards of 25,000 km per year, with associated reductions in emissions. Upon incorporation of a FCC existing service yard spaces can be reallocated to alternative use in light of the reduced service vehicle movements within the site. Space previously used for servicing, deliveries or storage can be reallocated to retail unit space depending on local constraints, thus increasing the viability and profitability of a centre. Many existing schemes, particularly urban schemes, are space constrained and the released service yard space can be used Air quality, noise, road safety and general public amenity benefits also arise from the reduced goods vehicle movements, particularly in sensitive areas of high pedestrian movement such as town centres or within a shopping centre environment. Green vehicles such as electric vehicles can further enhance these benefits, which have been operated with success at both the Bristol and Heathrow Airport schemes. These schemes have been found to be ideally suited to the nature of FCC trips, with a number of short trips followed by a period of time at the FCC which allows time for charging. BCSC Freight consolidation and remote storage 07

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11 Introduction BACKGROUND The design of servicing areas is a key factor in shopping centre design. A main principle is to make the servicing of centres as efficient as possible, both in terms of space allocated within the centre and the town/city as a whole, and in terms of vehicle movements. In the dynamic and rapidly changing environment of retail development it is important for the industry, for town centres and in a wider environmental context that servicing is as efficient as possible. This in turn provides both financial and time savings, and minimises any negative impact of servicing and delivery activities upon the town centre, shopping centre, and the surrounding road network. Traditionally, service yard provision has been guided by standards outlined in the 1995 BCSC Servicing Areas for Shopping Centres research study (updated in 2007), which has set out best practice to be followed for the design and management of service yards. One major assumption within both documents is that service movements to the site will be made directly through retailers own warehousing or storage facilities, which would result in a large number of vehicle movements to the shopping centre. Each retail unit within the centre would be served by a number of delivery vehicles per week specific to that retailer, usually dropping off a relatively small load as part of a wider delivery schedule in the region. More recently, thinking within the retail and logistics industry has turned to the principle of freight consolidation, often referred to as remote storage. STUDY AIMS This document has been prepared to provide a summary of FCC principles and current examples, and to highlight the potential benefits and challenges of implementing FCC schemes. This is illustrated by looking at the experiences of a number of stakeholders in the delivery and retail process, from shopping centre developers through to retailers and shoppers themselves. Further, the environmental benefits are discussed and commentary is given on the financial aspects of implementing a successful FCC scheme. This document brings the above findings into a targeted research paper, primarily aimed as guidance for shopping centre operators, developers and retailers. CONSULTATION PROCESS A key aspect of this study has been consultation and discussions with stakeholders in the delivery and retail process. Visits were made to two current FCC operations within the UK: the Clipper Logistics operation at Meadowhall shopping centre, Sheffield, and the Exel DHL operation at Broadmead, Bristol city centre. In addition, numerous meetings with stakeholders were undertaken drawing upon BCSC s contacts and experience. A workshop session at the 2008 BCSC Shopping Centre Management Conference was held to gather feedback on the concept from the manager s perspective. WHAT IS FREIGHT CONSOLIDATION? Retailing by its nature forms an integral part of town and city centres but also creates a number of challenges on the transport network, with the additional demand for vehicular travel to the centre, both by shoppers and by delivery and servicing vehicles. Traditional servicing for a shopping or city centre often sees retailers taking deliveries on an individual basis, either from an individual supplier or set of suppliers, or from their own regional distribution centre or warehouse. This leads to a variety of disparate delivery movements into a centre, with delivery vehicles competing for valuable city centre road space with other road users, including pedestrians, cyclists, public transport and private cars. BCSC Freight consolidation and remote storage 09

12 The concept of freight consolidation is that the number of service vehicle movements to and from a shopping centre is reduced by the operation of a FCC at a storage location remote from the shopping centre itself. Traditional deliveries The concept of freight consolidation is that the number of service vehicle movements to and from a shopping centre is reduced by the operation of a FCC at a storage location remote from the shopping centre itself. Supplier deliveries are made to the FCC, where deliveries are grouped onto dedicated delivery vehicles for onward delivery. Waste collection Supplier delivery Supplier delivery Shopping centre Supplier delivery Supplier delivery Waste collection Deliveries using freight consolidation A FCC is likely to take the form of a warehouse style facility, ideally located on the edge of a town or city, with good road access to the centre to allow goods to be forwarded easily from the FCC. Good access to the motorway network would also be an advantage, to facilitate inward deliveries from retailers to the FCC. The FCC would typically be operational for extended hours, to allow incoming deliveries to be received at times to suit logistics companies and suppliers. Staffing levels can vary to suit the level of activity. Only 1-2 staff may be required to receive a delivery, while more staff would be required during shopping hours when onward FCC deliveries are being made. Supplier delivery Supplier delivery Freight consolidation centre Supplier delivery Delivery by FCC vehicle and waste removal Shopping centre 10 Freight consolidation and remote storage BCSC

13 Goods for the shopping centre are delivered by individual retailers to the FCC. Goods are then consolidated into cages or containers for forwarding to the retailer when required. This delivery service could take the form of smaller vans and lorries rather than HGVs, and these would be loaded with goods for a number of retailers within the centre. The van would then in effect run a shuttle service between the FCC and the shopping centre itself, unloading goods for a number of retailers at the appropriate service yard or retail unit. The operation of a FCC has been shown to lead to reductions in delivery vehicle movements of up to 75% for participating retailers. BCSC Freight consolidation and remote storage 11

14 SELECTION OF CURRENT EXAMPLES Meadowhall Centre, Sheffield The Meadowhall shopping centre in Sheffield operates a FCC scheme, in conjunction with Clipper Group. Around 100 retailers (over 50% of the total) are now members of the scheme, some with annual contracts and some on an ad hoc basis. The scheme is understood to be commercially self-supporting. Flexibility for retailers was seen as the key to the success of the Meadowhall scheme, with the range of services being tailored to each retailer s requirements and not determined by the operator. A wide variety of pre-retail facilities are offered, including storage, unpacking, pricing, and sorting of returns. Additional security measures over and above the warehouse security (e.g. sealed cages) can be offered as required. The scheme operates from three warehouses totalling 30,000 sq ft of space, from which approximately 10 truck deliveries per day are currently made. Approximately five staff employed by the FCC are on site on an average day, together with a number of staff from retailers carrying out pre-retail duties on an ad hoc basis. Notable benefits to retailers include a dramatic reduction in back of house space. Clothes retailers USC, have reduced from the typical 30% of back of house space to roughly 1%, only for a small volume of returns and some staff amenity. In addition, the service yard space requirement has reduced, and some of this has been reallocated for uses including rainwater storage tanks. Broadmead, Bristol Bristol City Council and Exel DHL have been operating a consolidation centre in Bristol since May 2004 with the aim of reducing pollution and congestion in central Bristol. The centre aims to streamline deliveries and cut the number of delivery vehicles travelling into Broadmead, improving the delivery service for retailers. The scheme operates from a 5,000 sq ft warehouse approximately 25 minutes (10 miles) from the city centre, employing around six staff. The scheme focuses on the Broadmead retail area of Bristol, which has over 300 stores. The scheme currently serves 59 retailers and results published by the operators (Bristol City Council and Exel DHL) indicate a vehicle movement reduction of 75% for participating retailers has been experienced. This has equated to a total saving of almost 7,000 lorry trips into the city centre during the four years of scheme operation, equating to 178,000 kilometres. Retailers also have cardboard and plastic materials collected and recycled. An expansion of the scheme serves other stores outside the Broadmead area, principally sister stores to those served within Broadmead. The intention is to integrate the consolidation scheme into the expansion of Broadmead (circa 40% extra floorspace), which is now open. A key issue is to encourage retailer participation. A recent development of the scheme is the use of an electric truck on a trial basis for monitoring cost and emission savings. This vehicle has been loaned from the Exel DHL scheme at Heathrow Airport and it has proved to be operationally and economically viable at both operations. 12 Freight consolidation and remote storage BCSC

15 Heathrow Airport In addition to the Bristol scheme outlined above, Exel DHL also manages a 25,000 sq ft consolidation centre for the British Airports Authority at Heathrow Airport. The key intention of the scheme is to reduce goods vehicle movements and improve goods and waste handling systems within the terminal areas. Goods destined for Terminals 1 to 4 are delivered to the centre which is located remotely from the terminal buildings. The scheme is currently being extended to incorporate Terminal 5. The FCC is a central point for receipt of all incoming deliveries and all processing including security scanning, sorting and unpacking and handling of returns is carried out at the FCC. The FCC also receives outgoing waste and recyclable material from stores. The Heathrow scheme arose primarily from a desire to reduce vehicle movements to the terminal areas, and to alleviate restricted access and congestion at loading bays. Other issues were conflicts between deliveries, the need to manage areas with passenger and staff movement, and the limited space for backroom storage within stores. Freight and construction consolidation, Transport for London Transport for London recently part funded a construction consolidation scheme based in Bermondsey, which has the capacity to process more than 200,000 pallets of construction material each year. Currently the centre is serving four central London developments which are under construction. Initial results of a trial scheme showed the following: an increase in percentage of goods being delivered undamaged, in the right quantity and at the right time to 94%, which compares with an industry average of around 50%; reduction in construction traffic trips into central London by at least 70% for participating construction sites; and a time saving of circa two hours per journey for delivery drivers by removing the need to journey into central London and reducing the unloading time once on site. The FCC also improves security in the supply chain by consolidating inward deliveries to a landside location, at which all security processing and scanning of goods can take place prior to delivery to airside retailers. The FCC is a central point for receipt of all incoming deliveries, and all processing including security scanning, sorting and unpacking and handling of returns is carried out at the FCC. The FCC also receives outgoing waste and recyclable material from stores. BCSC Freight consolidation and remote storage 13

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17 What are the benefits to retailers? REDUCED ON-SITE STOCKROOM REQUIREMENT The most simple operation of a FCC is to provide an off-site stockroom, which although remote from the retail unit itself is close enough to provide stock in a short timescale when required. Incoming goods for a retailer can be held at the FCC, and the retailer can then order goods from the FCC on a just in time basis. This can result in a much reduced requirement for storage within retail units themselves, if goods are only called up from the FCC when they are required to go onto the sales floor. This reduced on-site stockroom requirement can lead to a reorganisation of the retail unit to provide more retail floor area. This can lead to a move away from the traditional 70% sales area/30% store area layout within a retail unit, to a far more efficient use of the unit for sales area, with 90% sales area or more being achievable. This concept has been demonstrated and applied to a number of shops within the Meadowhall centre at Sheffield which reallocated much of its former stockroom area to sales area following its participation in the FCC scheme. A notable example is USC clothes retailers, with a unit of approximately 10,000 sq ft and a storeroom of only 1-2% of this floorspace. This space is only used for staff and some storage of returned goods, with almost all storage of incoming goods and back-of-house handling conducted at the off-site FCC. The increased retail floorspace offers a number of benefits to retailers including allowing for a greater range of products to be carried within a particular retail outlet. The use of the FCC as an off-site stockroom offers retailers greater flexibility in the range of goods offered in a store. Stockrooms within retail units are inevitably constrained in size, whereas storage space at a FCC can often be greater. An identical amount of floorspace in a FCC can store a far greater range of goods, given that a FCC can utilise multiple levels of racking with forklift access. This additional storage space can allow a greater volume of goods to be stored within easy access of the retailer, allowing additional products to be offered from a store. DELIVERY TIMING AND FLEXIBILITY The use of a FCC for processing deliveries can allow a greater number of deliveries to be made and at different times of day. At Bristol the 24-hour operation of the FCC has allowed deliveries to be taken at the FCC at any time of day or night. This is a marked difference to previous practices, where deliveries to stores were restricted to within or around store hours, and often more specifically to pre-opening (e.g. before 10am) when store staff are available to handle deliveries. Deliveries to certain stores were also time constrained by traffic conditions and/or city centre Traffic Regulation Orders. In order to guarantee deliveries during these specific time periods, delivery companies were charging a premium, particularly as many retailers require deliveries at this time and vehicle and driver usage is in high demand. BCSC Freight consolidation and remote storage 15

18 Delivery companies experience a number of benefits from 24/7 operations, including flexibility over delivery time (with the added possibility of overnight deliveries for the next morning), avoiding traffic rush hours, and the option of scheduling vehicles and drivers at times which are traditionally quieter for deliveries. These benefits for delivery companies have been passed on to retailers in terms of reduced costs. Deliveries from the FCC to the store are made throughout the day but largely during the morning. The use of FCC staff to unload vehicles means a notable reduction in staff resource from the retailers. Greater flexibility can be offered in terms of deliveries across areas with limited access, in particular in heavily pedestrianised areas such as town and city centres or high streets. Currently, such locations where deliveries and pedestrians conflict are often controlled by delivery restrictions which only permit deliveries outside busy pedestrian hours. This means that retailers can only receive deliveries during specific times such as the early morning. With a FCC scheme, a small number of FCC vehicles could potentially cross the pedestrianised area during the day, using trained drivers familiar with the location and possibly using green vehicles. This would impact less on the safety and local environment for pedestrians relative to uncontrolled deliveries to stores, and could also allow deliveries to retailers throughout the day instead of only outside busy pedestrian hours. FLEXIBLE USE FOR PEAK TRADING A number of participating retailers in current schemes only use the FCC facility for retail trade at certain peak times. A remote storage facility can prove invaluable at Christmas peak shopping times, when large volumes of goods are required within short periods of time. In addition, the facility can be used on a temporary basis only when required by retailers. The Meadowhall facility was put to use during recent flooding which affected the centre. A number of retailers affected used the FCC as holding point for goods until their stores were back in full operation. PRE-RETAIL OPTIONS In addition to the remote storage, a range of pre-retail activities may also be on offer within a FCC. This can include: unpacking, sorting and labelling of incoming goods repackaging goods for sale (e.g. putting clothes onto rails) and sorting and re-labelling of returns. A flexible range of pre-retail solutions can be offered. Dedicated pre-retail staff at the FCC represent large savings to retailers, allowing retailer staff to be on the shop floor focussing on sales. Staff morale is also improved through a reduction in the time spent on pre-retail duties. This particular benefit has been experienced at both the Meadowhall and Bristol schemes. At Bristol, a recent retailer satisfaction survey reported 45% indicating that staff are less stressed and have improved morale, and 38% saying that staff can now spend more time with customers. 16 Freight consolidation and remote storage BCSC

19 SECURITY AND DELIVERY TRACKING Security is a key issue particularly for retailers of high value goods. Current FCC schemes employ a number of security measures to ensure goods are not misplaced. Cages of goods moving between the FCC and shopping centre are sealed and numbered with an itemised list of contents. Very few issues with security and delivery tracking have arisen from current schemes, and indeed a number of participating retailers are reporting decreases in shrinkage rates when using FCC schemes. Again, a flexible response to retailer requirements is key. Retailers with high value stock can be offered the sole use of lockable caged areas, which are only accessible to specific members of staff within the FCC. Various high value goods retailers and a number of mobile phone operators use current FCC schemes with both the Meadowhall and Bristol schemes. In secure environments such as airports, the FCC can bring significant security benefits, greatly reducing the number of delivery vehicles having to pass through security checks. The FCC would be located outside any secure area, and handle incoming deliveries, with only the FCC dedicated vehicles moving through security checkpoints to deliver to retailers within the secure area. RURAL FREIGHT CONSOLIDATION Freight consolidation can benefit rural areas relatively far from the strategic road network, where frequent deliveries are unviable. One issue facing retail outlets in more rural locations is the need for frequent deliveries, which can lead to restrictions in the range and quantity of stock carried in a store. The use of a FCC operation can help address this by preconsolidating goods for a number of retailers at a location which is easily accessible from the strategic road network. The onward movement to the more rural location is then made by a FCC vehicle carrying goods for a number of stores, with the advantage that each retailer can then receive more frequent deliveries. This can reduce waiting time for stock and can allow a greater range of stock to be available in store, potentially leading to increased sales. BCSC Freight consolidation and remote storage 17

20 RETAILER FEEDBACK AND TESTIMONIALS A variety of information on existing FCC schemes and the benefits to retailers is available from participating retailers. The following feedback highlights some of the benefits for specific retailers using the FCC scheme at Meadowhall. Using the FCC delivers store efficiency, flexibility and increased stock availability; deliveries are always on time. This leads to a real increase in sales. We would not have taken the increases without the FCC. (Waterstones) By using the FCC we have been able to dedicate the whole of our new store to retail selling space. This has enabled us to have more depth of stock and increase the lines we carry. The FCC removed the pressure of pre-retailing and merchandising the store, as we were provided with as much as required and an on demand service of vehicle/driver and transport. We now have a stockroom that we could never have had in store. (Monsoon) Using the FCC has allowed the store to extend the range and increase sales by 10%. (Greggs) We used the FCC for our store refit and found it extremely beneficial. Being in such close proximity enabled us to save numerous staff hours and halved the time it took us to remove stock. We were able to store everything in the FCC, which was more cost effective than returning the stock to our distribution centre. Having access to the stock enabled us to pre-retail and taking the stock in was much more manageable as we could drip feed stock in at times to suit the in-store team. (Jaegar) Since using the FCC we have been able to increase our stock holding levels and effectively manage the daily replenishment of stock which is vital for a seven day trading operation. (La Senza) Over the hugely demanding Christmas period use of the FCC was vital to my business. The FCC allows me to take unexpected large deliveries which I could not hold in store. I would conservatively estimate use of the FCC saved me losing in excess of 10% of business to other retailers in the same field. (Carphone Warehouse) Since using the FCC we have reduced shrinkage by over 70%. (USC) The FCC is good for business. It is reliable and we never have any problems. During the final sale weeks in the run up to Christmas we definitely increased sales. We attributed the increase in sales to the FCC; we are able to hold gifts that otherwise we would not have had space for under normal circumstances, which would have led to lost sales. (Ortak) Key benefits experienced by the retailers at Meadowhall include far greater flexibility in storage and delivery options, leading to an increase in the amount of retail lines offered by retailers. This has led to a corresponding increase in sales for participating retailers including Waterstones and Greggs. Additional retail space has been made available through transfer of storage to a FCC by a number of retailers, particularly when a move or refit allows a reorganisation of the internal layout of the store. Monsoon and USC are two examples of stores benefiting from a high percentage of floorspace used for sales purposes at Meadowhall. The value of a FCC for high volume sales periods such as Christmas is highlighted in the testimonials given here, with retailers including Carphone Warehouse and Ortak benefiting from a greater volume of incoming stock being received. A FCC also has advantages in exceptional circumstances such Jaeger s store refit, with stock held in the FCC during the time of the refit. A recent retailer satisfaction survey of the 59 participants in the Bristol Broadmead scheme highlighted a number of the key benefits which retailers are experiencing from the use of the FCC in this centre. Feedback from this survey included the following key points: 94% of participating retailers would recommend the service to another retailer 45% of participating retailers say their staff are less stressed and have improved morale 38% of participating retailers say their staff can now spend more time with their customers and no participating retailer has received any loss or damage to stock. 18 Freight consolidation and remote storage BCSC

21 Using the FCC delivers store efficiency, flexibility and increased stock availability; deliveries are always on time. This leads to a real increase in sales. We would not have taken the increases without the FCC. (Waterstones) The FCC is good for business. It is reliable and we never have any problems. During the final sale weeks in the run up to Christmas we definitely increased sales. We attributed the increase in sales to the FCC; we are able to hold gifts that otherwise we would not have had space for under normal circumstances, which would have led to lost sales. (Ortak) BCSC Freight consolidation and remote storage 19

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23 What are the benefits to shoppers? INCREASED RETAIL OFFER AND FLEXIBILITY OF ORDERING The use of a remote storage location offers a number of benefits for retailers and shoppers. Many retailers have relied upon regular but infrequent deliveries from specific suppliers to a back-of-house stockroom which is inevitably limited in size, often leading to shortages of particular lines of stock, especially shortly before the next delivery is due. The use of the remote storage aspect of a FCC can help address this issue. A wider variety of items can be stored at the FCC than in traditional in the back-of-house retail storage areas, and these remote units could be called upon on far more regularly. (The Bristol scheme operates at least three trips per day and the Meadowhall scheme up to ten trips per day.) This means that items are required in a shop could be requested during the day and could feasibly arrive on the shop floor within a matter of hours. Retailers at Meadowhall have reported instances in which certain items have not been available within a store, but have been able to retrieve from the FCC in response to customer requests within the time that customers stay at the centre. While the Meadowhall scheme enjoys the advantage of the FCC closely located to the centre itself, it is considered that such benefits could also be achieved for schemes with a FCC located further away (e.g. on the outskirts of a town or city centre), assuming that appropriate stock ordering systems and control of vehicle movements are in place. REDUCED VEHICLE MOVEMENT A principal benefit of a FCC is reduced vehicle movement to the shopping centre or town centre. Servicing movements, particularly to town and city centre sites, often impact upon pedestrianised areas, including time-limited servicing areas which are commonly found in town and city centres. Any reduction in vehicle movement (particularly HGVs) in such locations can only serve to enhance the environment for all concerned, especially for shoppers, staff and centre visitors. Reduction in vehicle movement can offer the opportunity to enhance the public realm in the areas around the shopping centre, to the benefit of the pedestrian and the shopper. A highwaysdominated environment, with features such as separate vehicular carriageway and raised kerbed pavements, can be converted to a more pedestrian-friendly street scene with lower kerbs which can enhance pedestrian safety, accessibility and the overall quality of the public realm. CUSTOMER COLLECT BY CAR The potential to offer customer collect by car facilities at a FCC could offer benefits to both shoppers and retailers, as the customer collect facility could be used by small to medium retailers who traditionally do not have such a facility. Customer collect by car points, particularly for retailers of heavier and bulkier goods, can lead to an increased customer dwell time within a centre, and an increased average spend to the benefit of retailers. (Shoppers are understandably reluctant to dwell in a centre while carrying large items or a number of bags from different stores.) A FCC could hold the more bulky items, with a sample product at the retail unit which effectively becomes a showroom for the bulkier items. Shoppers would purchase the item from the retailer and then be directed to the FCC to take collection once they have finished their shopping trip. A further extension of this concept could be the use of smart card ordering of goods within the shopping centre, with shoppers having purchases recorded on a card which can then be redeemed at the customer collect site at the FCC. A further extension of this concept could incorporate a FCC with a customer park and ride site. Shoppers could arrive at the FCC/park and ride site by car, and then use public transport to access the town or city centre. Once their shopping trip is complete shoppers would return to the FCC/park and ride site to collect bulkier goods from the FCC. Servicing movements will be reduced and can be carried out using dedicated vehicles such as green vehicles, and can make use of trained drivers to minimise safety risks where pedestrians may come into conflict with goods vehicles. Limited access to service stores via pedestrianised areas can be provided to FCC branded vehicles, operated by drivers familiar with the location. BCSC Freight consolidation and remote storage 21

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25 What are the benefits to shopping centre developers and operators? BENEFITS IN CENTRE DESIGN AND CONSTRUCTION The design and layout of shopping centre service areas, in particular the number of service bays to be provided for a given quantity of retail space, has traditionally been guided by BCSC guidance, most recently the Servicing Areas for Shopping Centres paper of One key conclusion of this paper was that service bay provision of 4.3 spaces per 10,000m 2 of retail space will allow for satisfactory servicing provision, with an increased level of management control. While this standard applies for centres served in a traditional manner, with many retailers taking individual deliveries, it is clear that the operation of a FCC can result in a reduction in delivery trips of up to 75%, reducing the requirement for service bays within the centre. This concept is best illustrated by the servicing arrangements for large department stores. These large stores often operate nearby warehouses or distribution centres, where goods can be stored and consolidated. The result is such stores often have a service bay provision as low as half of the typical ratio for general retail, as suggested in the Servicing Areas for Shopping Centres paper. When a FCC scheme can be incorporated within the design of a new build centre, the advantages are clear in terms of design and construction. A lower requirement for service bays can free up additional space for retail units, increasing the viability and profitability of a centre. Significant savings can be made on construction costs, particularly where, as is often the case in town and city centre schemes, servicing bays are located underground. Construction costs in such cases can be significant and any reduction in service bay requirement can result in large cost savings. FCC schemes can also be implemented during the building phase of a centre, as has been seen in schemes in London. During the shopfitting stage of new centre construction, a large quantity of materials from a number of suppliers is moved to a number of shops on the construction site, and a consolidation scheme can reduce the number of vehicle movements to the construction site accordingly. However, it is important to consider any future use of the centre, particularly the eventuality of a FCC stopping operations or cases where retailers choose not to use the FCC service. This could lead to an increase in delivery vehicle movements, so that a service yard designed on FCC principles could prove to be space constrained. Flexibility for possible expansion or reorganisation of the service yard should be considered to future proof any design, if there is a likelihood of increased delivery vehicle movements in the future. When a FCC scheme can be incorporated within the design of a new build centre, the advantages are clear in terms of design and construction. A lower requirement for service bays can free up additional space for retail units, increasing the viability and profitability of a centre. BCSC Freight consolidation and remote storage 23

26 REALLOCATION OF SERVICE YARD SPACE In light of the large amount of existing centres as opposed to new build centres, FCC principles are often incorporated into existing centres and service yard design. While some of the benefits of construction and design listed above are not applicable to existing centres, there are a number of benefits to the shopping centre operator which can be achieved through incorporation of FCC principles. In particular, the use of a FCC will reduce the service vehicle movements and the requirement for service yard space, which can be reallocated in a number of ways. Additional space released by the need for fewer servicing bays can simply be used to improve the efficiency of the servicing area, such as providing additional turning areas or improving access and egress. In consultation with shopping centre managers, service yard space has been highlighted as a key concern in a number of existing centres. Alternatively additional space can be used for waste and recyclable goods, such as the location of a compactor or recycle zone. Many centres incorporate sustainable measures such as rainwater retention tanks and these can be incorporated within service yards using space freed by the reduction in vehicle movements. Other alternatives can include waste to energy units and other such sustainable features. In some cases it may be possible to achieve additional floorspace by extending the centre to incorporate space previously taken for servicing, although it is accepted this may be difficult to achieve in some centre designs. Service yard space could be used for some functions currently carried out within retailers back of house stockrooms, thus freeing space within retailers units for additional sales. Space in service yards is often used for collect by car facilities and this could be offered to a number of retailers using the space released from servicing use. 24 Freight consolidation and remote storage BCSC

27 WASTE AND RECYCLABLE MATERIALS In conjunction with inward delivery to the shopping centre, there is the potential to use FCC vehicles to remove waste and recyclable materials from the centre back to the FCC for processing and onward movement. This would further reduce vehicle movements to a shopping centre, eliminating multiple refuse vehicle movements to a variety of disparate retail units. It would also provide cost and operational efficiencies by combining the various different waste contracts which are often in operation by retailers at centres. This was another issue highlighted as a concern in consultation with both retailers and shopping centre managers. Regular collection of waste and recyclable materials will reduce the need for storage within the centre, freeing up more space within a service yard for other uses. The collected waste can be returned to the FCC, as is the case at Bristol where an on-site recycling facility is located close to the FCC. The use of a FCC will reduce the service vehicle movements and the requirement for service yard space, which can be reallocated in a number of ways. BCSC Freight consolidation and remote storage 25

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29 Environmental benefits WIDER ENVIRONMENTAL BENEFITS While this paper focuses primarily on the implications of a FCC scheme on the retail chain, it is also appropriate to comment on potential environmental benefits which can be achievable with such a scheme. Significant work has already been undertaken on quantifying such benefits in connection with schemes currently in operation in the UK. For example, in approximately its first four years of operation the Exel DHL scheme at Bristol Broadmead has saved 7,000 lorry trips equating to 178,000 kilometres in the four year period. It is clear that significant vehicle mileage savings can be made as a result of the implementation of a FCC scheme, and therefore significant environmental benefits can be achieved. In addition, while the overall vehicle reductions on the highway network are small in relation to background traffic levels, there is nonetheless a benefit in terms of reduced congestion on the local highway network resulting from the reduced vehicle movements, making car access easier for customers. Further, there will also be an associated reduction in wear and tear on road infrastructure, particularly in light of reduced HGV movements on the road network local to the centre. LOCAL ENVIRONMENTAL BENEFITS Particular benefits to local conditions can result from use of a FCC. Town centres and city centres are often sensitive areas for air quality and noise, and the reduction in goods vehicle movements can significantly contribute to reducing such issues. Benefits can be further enhanced by the use of green vehicles such as hybrid vehicles or electric vehicles. Exel DHL have trialled the use of electric vehicles at both Heathrow and Bristol operations and it is understood that the vehicles proved well suited to FCC delivery operations. Electric vehicles technology has now advanced to a stage to be of use within a scheme, with speeds of up to 50 mph and payloads of 7.5 tonnes, similar to conventional vehicles. Ranges of up to 100 miles are achievable between charging, which allows several return trips between a FCC and a shopping centre. Pedestrian safety in and around the shopping centre can be enhanced by the reduction in vehicle movements, the use of smaller vehicles, and also through the use of drivers specifically trained for driving in heavily pedestrianised environments. WASTE AND RECYCLING The potential of FCC vehicles to remove waste and recyclable materials from the centre back to the FCC for processing and onward movement has been discussed in section 3. The Exel DHL scheme at Bristol Broadmead operates such a process, in which retailers have waste and packaging material collected with 7.3 tonnes of cardboard and plastic recycled in the first four years of operation. In addition to eliminating dedicated waste vehicle movements to the centre (and further reducing vehicle mileage), there are additional possibilities for combining a FCC with a recycling facility which has been explored within the Bristol scheme. BCSC Freight consolidation and remote storage 27