Welcome to Clipper Northampton 3

Tony Mannix, CEO

Retail Logistics Evolution and Innovation

Tony Mannix, CEO

Returns Management – The new battleground for retailers

Evolving solutions for retail

UK’S

LEADING

RETAIL LOGISTICS

SPECIALIST

Returns Management – The new battleground for retailers

Evolving solutions for retail

Evolving supply chain needs

The only constant is change

The customer is forcing Retail change

Evolving supply chain needs

*JDA and Centrino Christmas Customer Pulse Report

2017

Optimal online capability is essential

Evolving supply chain needs

The customer is evolving and is less tolerant

Evolving supply chain needs

19% of online Christmas

customers shopped at

alternative retailers due to

stock availability and

delivery time constraints

“Black Friday has now

firmly established itself in

the UK and is here to stay.

Sales increased yet again

in 2016 with the event now

expanded over multiple

days and moving

increasingly online.”

Paul Martin, Head of Retail, KPMG

in the UK

78%

of online Christmas

shoppers said they

would likely switch to

an alternative retailer

as a result of a poor

online Christmas

shopping experience.

of online

Christmas

shoppers stated

they had

experienced

issues with their

online purchases.

32%

*JDA and Centrino Christmas Customer Pulse Report

2017

Black Friday is now “Black Four Weeks”

Black Friday – a clear example of rapid change

Evolving supply chain needs

THEN NOW

The changing Retail process

Returns Management – the new battleground for Retailers

Then Now

Returns experience as critical as the purchase experience

Retail returns – now a core activity

Returns Management – the new battleground for Retailers

∙£600M∙

1. The Financial Times, UK retailers count the cost of returns, January 2016

2. Clear Returns’ ‘Why returns is the new battleground’ report, data from 2015

IN 2015, £600M WORTH

OF PRODUCTS BOUGHT

OVER BLACK FRIDAY

AND CYBER MONDAY IN

THE UK WAS TIED UP IN

RETURN LOOPS BY THE

MIDDLE OF DECEMBER

1

∙30%∙ OF MULTICHANNEL

WOMEN’S FASHION

PURCHASES ARE

CURRENTLY

RETURNED 1

2

*

1. Business2Community, E-commerce Product Return Statistics and Trends, April 2016

2. Business2Community, E-commerce Product Return Statistics and Trends, April 2016

3. Metapack Consumer Data, 2015

Retail returns

Returns Management – the new battleground for Retailers

∙92%∙ ∙67%∙ ∙51%∙ OF CONSUMERS

WILL BUY

SOMETHING

AGAIN IF THE

RETURNS

PROCESS IS EASY

OF SHOPPERS

CHECK THE

RETURNS PAGE

OF A WEBSITE

BEFORE MAKING

A PURCHASE

OF CONSUMERS

THINK THE

RETURNS

PROCESS IS TOO

COMPLICATED

1 2 3

PwC

PwC

Supply chain implications

Omni-channel supply chain – sub-optimal

Returns Management – The new battleground for retailers

Returns – single largest source of inbound stock

Additional DC pressure

Little visibility

Reduced compliance

Space and time hungry

High customer expectation

driven by slick online ordering

process

PwC

Omni-channel supply chain – re-optimised

Returns on returns

Clipper developed

solution interfaces

with your retail/online

systems

Retail focused Click & Collect

The new model

Click & Collect – customer experience

The new model

*JDA and Centrino Christmas Customer Pulse Report 2017

Fully integrated into the retailer on-line systems

Full track & trace

Next day delivery against a timed delivery schedule

Parcels sorted into cages at sorter hub – parcel to cage “parent & child” association

to ease store handling/storage and efficiently provide in-store system updates –

complete transparency throughout

Able to fully integrated with in-store systems to provide enhanced customer care at

store location

Ease of returns via the network to provide potential for same day “Boomerang”

processing

The Click & Collect solution was developed to enhance carrier solutions by creating a retail

focused operational process

Returns on returns

The on-line sector

is growing

Click & Collect is

growing

Intolerance of

poor service is

growing

Time pressure is

growing

Retailers want to provide an

integrated store and online

experience

Retailers want brand protection

and loyalty

The combined Click & Collect network and Boomerang provides customer

care benefits & the rapid release of working capital - getting stock back

into inventory at pace.

Click & Collect and Boomerang

The new model

*JDA and Centrino Christmas Customer Pulse Report 2017

What next?

Mechanisation, automation and collaboration

What next?

The retailers dilemma…. “The required shift to

increased automation

will necessitate

significant investment

at a time when cash

flow is impacted by

depressed margins”

Dom Carter, Head of Retail Working Capital

Management, KPMG

A Clipper “shared use”

opportunity….

Four emerging retailer themes PWC - 10 Things You Need To Know About Total Retail

What next?

Simplicity There is an increasing need

for retailers to maintain

simplicity throughout the

ever-evolving customer

journeys and beyond.

Connection Customers now demand

more personalised

connections…exceptional

service needs to go beyond

the transactional.

Innovation

With retailers in the world

racing to innovate, a lack of

investment in innovation is a

risky business.

Trust

Uncertain times have led

customers to rely on retailers

they know and trust

PwC: 10 things you need to know about Total Retail

It used to be simple…..

Complexity creates

opportunity….

Digital commerce needs a digital supply chain

What next?

Linear supply chain

Digital supply chain

• Helping retailers face the future with confidence whilst protecting their brand

• Collaboration – “Clipper shared use”

• Mechanisation & automation – cost effective, modular approach

• “Prime” it’s not just about Amazon

• Efficient inventory management via Clicklink & Boomerang

• UK & International

What next?

Clipper – the evolution continues…

Clipper “on-line” In Action - 2016

Evolving Supply Chain Needs What next?

Clipper ’online’ in action – 2016

• During 2016 Clipper:

despatched c55m units of e-comm volume

& processed over c40m returns

• Clicklink, our new network, delivered into the stores of our retail customers over

3m parcels in the pre Christmas trading period 2016

Thank you

Operations

The Changing World A Retailer’s Perspective Dino Rocos Operations Director, John Lewis

Operations

Retail “A Time of Change”

“Personal”

“Mass”

“Mass Personalisation”

Operations

Multi-format and Omni-Channel Retailing is the norm

Operations

Online Sales Share by Value (£)

10% 12%

14%

17%

21%

26% 29%

33%

38%

42%

2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

Operations

Online Shipped Units

15%

20%

31%

41% 45%

48% 50.2%

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

10,997,414

28,038,013

21,703,595

18,640,935

14,308,840

32,622,882 35,883,471

Operations

The modern customer is demanding

I want speed

I want to change my mind I want convenience

I want choice

Operations

Omni customer interactions

Advice

Returns

Fulfilment

Transact

Operations

This complexity brings cost

Shop replenishment Omni-channel fulfilment

Fulfilment CoS continues to grow

Variable cost

Semi-variable cost

Fixed Cost

Operations

To win we need efficiency

Consolidation

Less Stock

Lower Overheads

Automation

Productivity

Operations

Retailers need to be clear about where they add value

Differentiated Standardised

Keep in house Collaborate

Unique Product

Lasting Relationships

Trusted Services Trunking Click and Collect

Dispositioning Returns

Operations

Clicklink is collaboration in Action

Conceived as a shared

multi-user operation, not

dedicated to John Lewis

Encouraging others to take

advantage of the benefits and

drive greater value for

Clicklink

Partnered with Clipper to

bring operational expertise

and act as an ‘honest broker’

Operations

The future will bring more change in how we work

Growth in network level

sharing and collaboration Greater use of traditional

shared user services

Sharing more complex

capabilities such as automated

warehousing and fulfilment

John Lewis is pleased to be leading the way

Others will follow as the challenges of omni-channel retail continue grow

Northampton 3 – Site Overview

Background

Clipper and JLP have worked together in partnership for some time:

Pre-Retailing in Hornsey / Enfield since 2001

E-Commerce fulfilment in Ollerton since 2010

Started trials re Clicklink via Waitrose in 2015

Set up the Ancillary Distribution Centre (ADC) in 2016

Created a joint venture in 2016

John Lewis ADC and Clipper:

John Lewis and Clipper signed a 10-year commercial partnership re the ADC

John Lewis wanted to locate the ADC close to their Magna Park campus

John Lewis and Clipper agreed that a shared use facility model was the best way to support growth

44

Clipper Northampton 3

15 miles

to Magna

Park

Site

Agility with ability

Secured and fitted-out Northampton 3 to plan

Successfully completed 5 * start-ups - all during their peaks

Operated 3 * start-ups whilst the site was under CDM

Designed and implemented JDA Dispatcher to plan

Successfully partnered with professional agency staff providers

From operational start in July 2016 the site team grew to 750 in peak

RETURNS PRE-RETAIL INDITEX CLICKLINK FORWARD ORDERS

Scale of build

Northampton 3:

Site acquired on 21st March 2016

15m height to eaves at haunch

30 loading bays, of which 8 support double-deck trailers

c5000 high-bay pallet locations

38 trailer parking spaces in 50m yard

224 parking spaces for employees and guests

Available and potential space

Warehouse slab - 286,000ft2

Main and Hub office - 23,500ft2

Current 2 * mezzanine - 283,000ft2

Potential 2 * mezzanine - 281,000ft2

Potential mezzanine extension - 158,000ft2

1,031,500ft2

29-Mar-17

Inditex Brands

Strategic

Supports Inditex decision to increase brand awareness in the UK

Provides a foothold in the UK to support store and online growth

Clipper and Inditex

Proven 3PL credentials – set up and operate Zara e-comm in Clipper N2

The site operation has the flex to cope with the planned growth

Retail focused Click & Collect Richard Ball

Delivered by

What is Clicklink?

Retail focused logistics solution

- Retail logistics

- Established network

- Volume

- Retail knowledge

50%

Joint Venture

Established July 2016

50%

Why?

10% 12%

14% 17%

21%

26% 29%

33%

38% 42%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Online % share of trade

56% in-store collect

… for John Lewis

… for Clipper

Network expansion

Additional client services

Low volume/high frequency market

Clicklink uncovered

Current network

SWAD HUB

N’HAM HUB

CLIPPER OLLERTON

NORTHAMPTON

IFORCE

BLAKELANDS

MAGNA 1 & 2

GLASGOW

SWADLINCOTE

NORTHAMPTON

HARLOW

LONDON 2

BRISTOL

Process

Track & Trace

DC’s and Depots Transportation Stores

Customer order tracking

Hub to hand visibility

System Integration

Light touch for customer

Single interlinked system throughout

Back of house interconnectivity

Click & Collect – The Carrier Solution

Network

Home delivery parcel

network

Complicated routing

structure

Little or no value add

Technology

Low visibility

Multiple integrations

Process

Irregular and split

deliveries

Abandoned deliveries

Loose parcels

Clicklink – the retail focussed solution

Network

Focus on a C&C

specific solution

Speed and efficiency

Returns loop

Technology

Mnetics solution to

provide tracking and

maximise storage

Parent / child

scanning

Process

Timed deliveries

Cages arrive “retail

ready”

Focus on branch

compliance on inward

scan

Timed deliveries by store (1 hour window)

Allows for cost effective planning of store staff hours

Closed loop for delivery media control

Provides opportunity to utilise totes

Collection at same time as delivery

Consistency of approach for stores

One stop solution for mainland UK

Single point of contact for customer service

Operational benefits

Immediate:

Handling of inter-store transfers

FOC removal of recycling

Broader evening and out-of-hours opportunities

Hanging garment handling

In development:

Direct label integration with WMS

Integrated Boomerang solution

Value-added opportunities

Thank you

PwC

Boomerang™

High level Boomerang process

Returns on returns

Time criticality

Returns on returns

• Refunds back to customers need to

happen within hours not days

• Customer service priority – returns

process is last customer contact

point, leaving a lasting impression

Electrical Returns Management

Returns on returns

• Returns process managed by one solution “Boomerang” from the customers order

being returned to the DC to the final disposition route of the stock

• Streamlined stock handling through pre-determined sampling decisions.

• Opportunity to make proactive decisions from increased stock visibility.

• Opportunity to impact costs and lost sales by cutting down handling time.

• Rapid release of inventory to allow sale at full margin

Summary

Returns on returns

Systems enhancements

Returns on returns

Clipper has been working with JDA to enhance returns receiving to:

• Improve the returns process flow through the system

• Allow pre-defined rules to drive product down the most efficient route, removing the reliance on

users

• Introduce product images at key points

• Increase the number of product images available, including web links to retailers web platforms

• Introduce product information and notes at key points in the returns process

• Enable JDA to automatically set an order to shipped when imported to enable returns receiving

• Capture key sampling data for operational management and buying teams

Returns receiving

Returns on returns

When an order is scanned for returns receiving it will be displayed with a product image:

Returns receiving

Returns on returns

The user can click on the thumbnail and a bigger image will appear:

Sampling

Returns on returns

Any value added services can be selected when sampling the item:

Servicecare are an eBay and Amazon strategic account managed

partner

• Lower rates, white labelled stores

• Access to marketing, advertising funds and campaigns

• Product remarketing

• Up to 85% of RRP achieved

• Multichannel flexibility

• Social media capability

• In-house marketing

• Email campaign management

• Electrical-deals/Genesis provides anonymity.

• Insured warehousing with pick, pack ship / drop ship capability

• Onsite retail outlet

• Dynamic listing and customer services provided

• Full MI capability

Asset recovery

Modular Approach

Wrap Up

Wrap-up

Tony Mannix, CEO

Some market statistics

Average weekly spend online in January 2017 was £1billion, an increase of

10.1% on January 2016

The online market makes up over 20%, of total non-food sales

The returns process can cut retailer profits by 10-20% each year

Retail sales in Great Britain: Jan 2017 by Office for National Statistics, February 2017

Online growth rate unchanged in February by BRC, March 2017

The reverse logistics report: How retailers can save money by making returns smoother in the e-commerce age by Business Insider, October 2016

Wrap-up

Some market statistics

It is expected that by 2025, click and collect usage will double, and generate 10%

(£23bn) of UK retail sales.

How has Click and Collect evolved, and is it still in high demand? By eConsultancy, January 2017

Wrap-up

• The retail sector is continuing to evolve to meet changing customer expectations

• Clipper has total focus on the retail sector and is ideally placed to help with innovative solutions/ideas to drive profitable change

Clipper – The Retail Solutions Provider

Summary

Wrap-up

Thank you for listening