CaseStudy
Very efficient
Very’s automated fulfilment centre and stock management overhaul led to rich data, more granular forecasting and significant cost savings
Words Annie Makoff
Project Casebook
Company data
Revenue
* The Very.co.uk brand accounts for 85% in sales
Profit
Staff
** Profit before tax
Projected revenue: Revenue is forecast to approach £2.5bn by 2026/2027 according to Retail Week Prospect.
The challenge
To use digital capabilities to automate operations, improve customer experience and increase satisfaction.
Finance
Headcount: 100 employees across The Very Group’s finance function.
Key teams: Very CFO Ben Fletcher supports key teams across the business such as the culture team, the people team, the tech team and the finance team in delivering effective change across the organisation.
Approach
Updating the company’s pre-existing manual processes and legacy systems, investing £150m in Skygate, a new fully automated fulfilment centre that consolidates three old sites under one roof and provides data-driven insight and information to core business departments.
Results
Reduced fulfilment centre labour costs by 60%.
Orders are processed in as little as 11 minutes in comparison to four hours with manual system.
Saved one million road miles a year.
Shaping and protecting the future of the company is a central focus for the finance team at The Very Group. Part of a business transformation project, known internally as ‘Future Very’, it has played a major role in transforming the business.
With volatility, uncertainty, complexity, and ambiguity (VUCA) defining aspects of the current landscape, it’s more important than ever to futureproof businesses — particularly in retail — from whatever comes next.
The Future Very project, says Ben Fletcher, chief finance and transformation officer at The Very Group, helps keep his team’s minds on the importance of being future-ready.
The Very Group — formerly Shop Direct and Littlewoods — and now comprising Very.co.uk, Very Ireland and Littlewoods.com has already undergone several critical moments of transformation over the last 20 years. One involved the decision to become an online-only retailer, one was to move away from mail-order print catalogues and another was to invest in an automated warehousing operation which involved a “major people systems” and “processes change”.
“Being an online retailer gave us a huge advantage during the pandemic,” says Fletcher. “But when we came out of it, we had to think about how the world had changed and how customer needs had changed. Our business is transforming the way it operates through Future Very, and finance is very much a part of this. It’s a post-pandemic consideration of what the future of the company should be.”
The Very Group, which serves over four million active customers, was one of the first online retailers to offer over 2,000 famous brands across general merchandise, home, fashion, beauty and electric. It also offers the widest range of flexible ways to pay from paying in full, pay over three months to ‘buy now pay later’. Taken together, it broadens the company’s revenue streams from customers while offering more choice.
A huge part of Fletcher’s role has been to marry business objectives like these with the objectives of the finance team. That meant improving the customer experience while realising operational efficiencies.
“A successful transformation project should do three things: it must do a great job for customers, a great job for the economics of the business and deliver non-economic benefits.”
Although he is a proponent of gradual transformation via marginal gains in order to involve, engage and coach people along the way, Fletcher is conscious of the need to make big changes where necessary. And recently, there was a genuine need to undergo such a transformation, one which overhauled legacy systems into a digitally native way of working.
THE SECTOR
The Very Group is an online retailer
THE CHALLENGE
To take the business through a digital overhaul via automation and rich data
THE OUTCOME
Established an almost fully-automated stock management system
A successful transformation must do a great job for customers, a great job for the economics and deliver other benefits.
From analogue to digital
“We weren’t born a digital company, we were born as a stores and catalogue operator,” Ben explains. “We had many legacy systems and processes and it became imperative years ago, even before the pandemic, that we ultimately became digital-first in the way we operate.”
Previously, Very operated its fulfilment centres manually, so every order and return was processed by hundreds of staff located at three locations across the north of England.
Shifting away from manual
Within the finance function, it was a similar story, with manual and sometimes inefficient processes, as well as legacy systems. And for the finance function to be a key driver in business strategy, more change was needed.
The resulting £150m transformation is a highly automated fulfilment centre in the East Midlands known as Skygate. At the “cutting edge” of retail warehousing, Fletcher believes it’s the most automated warehousing facility in the UK. The 850,000-square foot facility, which holds over six million items, brings together two fulfilment centres and a returns department under one roof. Automated technology facilitates the movement of stock around the site based on algorithms, which continuously updates with market trends and consumer preferences.
“Stock is shifted, moved, selected and picked by thousands of robots in minutes: nothing is picked by human hand, which dramatically reduces errors,” Ben explains. “Stock shifted to the front of the site is therefore most likely to match future customer demands and will be the quickest to pick. Our technology is constantly learning, which feeds back to the finance team, allowing us to better understand and forecast future market trends.”
More efficient, more data, better decisions
Accurate data gathered from the Skygate facility has significantly improved the finance team’s performance at Very, the group’s chief finance and transformation officer Ben Fletcher says.
The technology and algorithms at Skygate feed back to the finance team, which then benefits from high quality, accurate and up-to-date information which is used to interpret and forecast much more strategically.
Fletcher and his team can now access and interpret accurate data analytics straight from the technology behind Skygate, a big part of which means linking customer insight with financial insight and vice versa.
“The way we sustainably create value is by getting more things right for our customers because it builds their confidence and retains their business.
“We can then complement this with the financial team perspective and look at how efficiency can be achieved – and for us, that’s getting comfortable with data – working with it and understanding it.”
The result is that the team is, Fletcher explains, in a “much better position to ask questions like ‘What’s the collation rate? How fast are we getting products to customers? What’s the average turnaround time? What’s our rate of sales this year compared to last?’” He notes that “by being operationally more effective, we’re seeing the opportunity to be much more financially resilient so that’s a huge value creation”.
As a result, Very’s finance team can now use the data it receives from Skygate to “forecast per year returns and forecast stock provisions and loss rates. When you’ve got higher quality information coming out of well-invested systems, you’re able to work much more accurately and efficiently”, he adds.
Opening the Skygate
The system, which went live on 26 March 2020 — incidentally the day that then-prime minister Boris Johnson announced the first lockdown — has transformed customer experience, revolutionised financial forecasting and created additional benefits.
Skygate has lowered labour costs by 60%: significantly fewer staff are needed at the fulfilment centre, most staff have since been redeployed to other business areas.
The location itself was picked carefully too. Eighty per cent of customers live within a three-hour radius of the site which is also located near a railway line. “It’s saving Very one million road miles a year,” says Fletcher.
Skygate also runs on renewable energy which helps the group meet its Scope 1 and 2 global emission targets.
“It has transformed our ability to do a good job for customers,” Fletcher says. “Orders are ready for despatch in as little as 11 minutes, compared to four hours at the old sites.”
Returns and refunds are processed quickly, too, with returns being ready for resale within 30 minutes. And when it comes to online shopping itself, the cut-off time for next-day delivery has been extended until 10pm. Previously, the cut-off time was 6pm, so customers have an extra four hours’ shopping.
