Big Box Shop

Well, Black Friday passed me by. I did scan a lot of ads and websites in the hope that I’d see something that grabbed me, but it didn’t happen. It’s easy to get wound up about our consumer society, but I’m happy enough to see it robustly function for other people while I hold onto my money with a death grip.

I think we’re all aware how much shopping has changed in the last ten years with the move to on-line but, let’s be honest, when it comes to retailing, we Brits have been pretty good at it. We are a nation of shopkeepers and we keep the people coming back for more.

I worked for years with the major UK supermarkets and, for a long time, most of them were widely acknowledged to be “world class” businesses. Whether it was transforming their “Own Label” propositions, pioneering “Category Management” and building incredibly robust and efficient supply chains, UK retailers were – and still are – admired throughout the world.

As a supplier, the fastest way out of the major supermarkets was to consistently fall over on supply. The retailers don’t really sit on stock these days and expect product to turn up “on time, in full”, 365 days a year. After all, what’s the point of shops if nothing is on the shelves? Retailers expected stock to ordered one day and turn up the next, 100% correct versus what had been ordered, and booked into their major distribution hubs at a specific time.  These days, as a shopper, you almost expect to turn up to a Tesco’s on Christmas Eve and find fresh turkey on the shelves, sprouts spilling into the aisles, goose fat in which to roast your tatties and 56 varieties of gravy to bathe them all in. And that’s in any Tesco, Asda, JS, Morrisons (and so on) in any town throughout the UK the night before Christmas. The fact that the goods are there for you doesn’t happen by accident.

Meanwhile Amazon have applied this principle directly to household consumers. Again, the supply comes from the super-hub distribution depots built to service this demand. Most of us are vaguely aware of these mega box distribution centres that you sometimes glimpse from the motorway and probably wonder what goes on in there? I’ve been round a few in my time and they are awesome installations, but I won’t pretend that I really know how they do what they do on a daily basis. I just know that they’re incredibly effective at it. (As, incidentally, are the majority of suppliers and manufacturers who are supplying into these boxes on a daily basis.)

The future of retailing may be up for question but the future of shopping isn’t. We may all be sitting at home ordering our stuff instead of heading for the high street or mall to do it, but “do it” we most assuredly will. And those goods will need to be stored and despatched from centralised points, whether it be by driverless van or Amazon drone.

The future of shopping will be all about supply. It’s actually always been that way. So I was very interested to read of a new investment fund being launched in December, namely the “Aberdeen Standard European Logistics Income” trust.  This was highlighted and explained by Ian Cowie in this CIty Wire article which, as soon as I read it, I had a gut feel that it was a good bet. Generally speaking, I don’t really buy into actively managed funds due to the charges levied and sink most of my investments into Index trackers. Occasionally though, I make an exception, and it’s usually when something I read suddenly rings true with my own experience of the world.  Nobody knows what the future holds of course, and no doubt I could quickly think of an alternative distribution future that has a focus on micro-hubs, but I haven’t read much, if anything, about that. Investing is about taking calculated risks, even when picking trackers, and sometimes I think that a gut feel based on experience is almost as worthy as an in-depth analysis of a business or an economy. Gambling is a calculated risk too and, although we might hate to admit it, that’s what we’re doing with any investment.

As I’ve been sitting on some cash recently, I put a chunk of it in this direction. “Buy what you know”, they say, and I think I know that shopping isn’t going to die out anytime soon, even if the shops do. 

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