Direct to market, UK style

Australian Hardware Journal

Bob Vereen turns his attention to the European market where he has discovered a highly successful operation based in the United Kingdom – despite its strange name of Lakeland Limited.

Part of Lakeland Ltd.´s highly mechanised, computer-controlled distribution center, which feeds stores and handles Internet and catalogue orders

The world is not going to beat a path only to the doors of retailers like Wal*Mart and Carrefour when there are innovative merchants like Sam, Martin and Julian Rayner of the United Kingdom still committed to giving consumers unique products, good value and outstanding service. The three men operate a highly successful specialty chain which gets product to consumers three specific ways:

 

  • In face-to-face selling via 25 productive but small retail stores in high income areas throughout the UK
  • By catalogue selling via a series of specialty catalogues featuring seasons and sections of the home (i.e., kitchens, Christmas, etc.)
  • Via the Internet with one of the most heavily trafficked retail websites in the UKAccording to Martin Rayner, the UK enjoys one of the highest rates of owner-occupied homes in the world (67%). “Homes are in the news,” he says, “with cooking shows and home improvement shows attracting big TV audiences”.

    This mechanised stocking/picking system currently is the only one in the UK, enabling the firm to fill 20,000

    In a market like this, Lakeland’s business strategy clearly focuses on serving the higher-end segments of the consumer market. Its customers are looking for “something different and new” and have the income to acquire these items. Many times they suggest products found on trips or for which they find a need. Retail sales account for half the chain’s volume; catalogues and the Internet (a growing activity) the other half.

    While predominantly what might be called a “housewares” chain, Lakeland’s inventory includes a broad range of storage products, outdoor living, and even a smattering of specialty food items. Seasonal categories such as Christmas play a very important role in the chain’s success.

    Lakeland strives to find innovative products and searches the world for them. It introduces 700-800 new products a year, many which are found exclusively in its stores because its buyers do a lot of digging to find items and sources and follow up on customer suggestions.

    One typical success is an electric cooker from Czech Republic, which outsold its forecasted sales 400% just in the first week after the catalogue reached consumers. The small factory added two shifts, and demand has continued high.

    Committed to customers

    Products come down conveyors and are fed directly to shipping docks for stores or for mailing to customers

    Rayner says the company is committed to superior customer service, and offers an example by saying that when a customer places a phone order after receiving a catalogue, the employee stays on the phone to talk to the customer and doesn’t just “take the order.”

    Superior customer service results from an enlightened employee relationship which involves training rooms, lounges, a games room, and close relationships with the owners and store managers.

 

Rayner also explains that management trust the staff “to do whatever is necessary to satisfy the customer.” In some cases, three generations of families are employed by the company.

To keep in touch with customer thinking, the chain conducts customer surveys annually (at considerable expense, Rayner admits) and actively seeks customer suggestions year-round regarding products, service, etc.

In order to maintain the personal relationship it considers so important, it continues to use people to answer phones. No answering machines and recorded and confusing lists of buttons to push. In fact, Rayner says the company philosophy is based on trust-trust between the chain and its customers, among the staff and between suppliers and the chain.

Retail store sites are carefully chosen. They must be in good income areas and desirable tourist locations. Its store in the Bluewater Mall, one of the largest in Europe, is one of the highest volume specialty shops in the entire mall, according to Rayner.

Efficient ordering system

Internet sales account for almost a quarter of all Lakeland´s revenue

The firm operates its own computer-controlled distribution centre in the Cumbria region. Ninety-eight percent of its mail orders are shipped immediately and complete. It achieves a 6-time annual stockturn and has been enjoying growth at a 20% rate for the past 10 years. Its automatic stock replenishment system is currently the only one in the UK. Employees wear radio data transfer scanners on their wrists to pick, pack and store products and feed that data into the computer instantaneously. The system is so efficient it can handle 20,000 orders a day.

The chain is an aggressive importer, seeking products from everywhere in the world. “We are very respectful of patents and copyrights,” Rayner says. “We also are proud of our vendor relationships. Ninety-five percent of all our international business is done on open account, not letters of credit.” Of its 400+ vendors, about ten percent are from the United States.

What kind of products does the firm seek? Rayner says they must offer clear customer benefits, tell a story, be environmentally friendly and offer good value. The company does its own product-testing before an item can be added to its 2,000 SKU inventory.

Family Origins

Bob Vereen turns his attention to the European market where he has discovered a highly successful operation based in the United Kingdom – despite its strange name of Lakeland Limited.

Lakeland Limited is a family owned company and was originally established in 1963 to supply polyethylene freezer bags. Lakeland’s focus on superior customer service comes from its tightly defined customer profile.

All the stakeholders in the business are considered to be interdependent and are responsible for the function and growth of the business. Trust and communication between the stakeholders is considered essential for business development and growth.