Consignia criticised for cutting jobs as market for home deliveries is set to increase significantly
Consignia, the state-owned post office group, has been criticised for cutting jobs as the market for home deliveries is set to increase significantly.
Verdict, the retail consultancy, says home delivery is set to grow rapidly over the next five years, driven by increased online ordering and more multichannel retailers.
According to the Verdict report the value of goods being delivered to shoppers’ homes will rise from £28.3bn ($41bn) this year to £42bn by 2006.
Last week Consignia sparked a wave of protests when it announced plans to axe 30,000 jobs through voluntary redundancies to meet cost-saving targets of £1.2bn by April 2003. However, Richard Hyman of Verdict said Consignia could be one of the main beneficiaries of this growth in its core market – if it is still in shape to make the most of the opportunity.
“It is ironic at a time when Consignia is talking about major cost reductions and job losses that here is a business opportunity in its marketplace forecast to grow by nigh on 50 per cent over the next five years,” he said.
Mr Hyman pointed out that competition for the growth would be fierce.
“It remains to be seen how good they are at making the most of an opportunity like this,” he added.
The report predicts that by 2006, 17 per cent of retail sales will be delivered to consumers’ homes, compared with 13 per cent now.
Verdict predicts big changes in the two main components that drive the delivery market – store-based ordering of bulky items and remote ordering through catalogues and the internet.
Store-based orders currently account for 56 per cent of home deliveries, but the report says the growth will come mostly from remote ordering.
“Remote ordering . . . is where the future lies, as consumers become smitten with the convenience of home shopping and want a much greater diversity of products delivered to their homes,” says the report.
The largest chunk of the increase in remote ordering is expected to be in food and grocery – and this will come from online shopping, which Verdict forecasts to grow 269 per cent to £5bn by 2006.
Of companies already operating in home delivery, Verdict says the top three mentioned by customers were GUS, Amazon and Argos.
While GUS remained in the top slot, it showed the second greatest decline in mentions – after Littlewoods – due to the massive attrition in the agency catalogue sales.
Argos enjoyed the greatest growth in usage while Amazon also grew in customer mentions. Home Delivery and Fulfilment 2002. Verdict Research, Newlands House, 40, Berners Street, London W1T 3DU. £1,350 www.verdict.co.uk
Financial Times
