Traverse City Record-Eagle

Business

December 23, 2012

Retail makes a final push

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FREEPORT, Maine (AP) — With the final retail push under way, L.L. Bean CEO Chris McCormick is playing Santa's helper against a backdrop of conveyor belts and front-end loaders as he boxes up slippers and shirts. But there's little time to reflect on the holiday cheer those gifts will bring because he's busy concentrating to make sure no shipments go astray.

At L.L. Bean, top executives are abandoning their desks to work in the shipping department and to answer customers' phone calls as part of an annual all-hands-on-deck approach to ensure last-minute purchases arrive at their destinations before Christmas.

This season, the deadline for orders with guaranteed Christmas delivery is the latest ever, with L.L. Bean offering free shipping as late as noon Friday.

"Consumers are going to buy when they want to buy. There's no changing that, so we have to be ready," McCormick, his sleeves rolled up, said during a break inside the busy 1-million-square-foot distribution center where nearly 200,000 orders are shipped daily in late December.

There's never been a better time to be a procrastinator because retailers continue to offer later guaranteed delivery, and in some cases retailers are offering same-day delivery in select cities, said Al Sambar, a retail strategist at the consulting firm Kurt Salmon.

Thanks to improved shipping logistics, many online and catalog retailers established Christmas delivery deadlines on Thursday and Friday, with some like Amazon extending the deadline for one-day shipping until Saturday.

And shoppers can expect the trend to continue.

Retailers are increasingly focusing on speed. Following Amazon's lead, other retailers are experimenting with regional warehouses to get the product closer to potential customers, said Raj Kumar, a retail partner at A.T. Kearney, a management consulting firm.

Macy's, Toys R Us and Wal-Mart are testing pilot programs in which stores themselves are utilized as shipping hubs as retailers push for next-day and same-day delivery, he said.

Unlike Amazon, L.L. Bean's worldwide shipping hub is centralized, about a mile from the corporate headquarters, and features seemingly endless aisles of flannel shirts, L.L. Bean boots, camping supplies, and other items.

along with a labyrinth of conveyors and chutes that transport them, and a fleet of trucks.

The company hired 4,700 seasonal workers to help with the holiday rush, doubling the workforce, and 500 administrative employees are expected to get into the act during crunch times.

Earlier this week, McCormick was boxing goods in the shipping department with the company's financial controller, Kierston Van Soest. Nearby were the company's chief financial officer and other executives. In Bean parlance, they're dubbed "day hikers," since they're on a temporary daily assignment.

Pulling items from a shopping cart, McCormick and Van Soest scanned the products with a bar code reader, printed shipping labels and order forms, and then boxed up the items, tossing in catalogs for good measure. On this day, popular items included headlamps, Wicked Good slippers and shirts.

In the past, McCormick worked on a product-sorting conveyor line, in the retail store stockroom, and in a recycling area, breaking down empty cardboard boxes. The worst job of all, he said, was one stint working in the part of the call center that deals with angry and frustrated customers, attempting to set things right.

"It's hard because you've disappointed people and you don't want to disappoint anybody, especially at this time of the year," McCormick said. "I wouldn't want their job." The company does its best to keep customers happy. On that day, hundreds of shipments were being upgraded free of charge to UPS air to beat the first major winter storm in the Midwest.

McCormick said it's nice to get out among the workers but there's a practical purpose for having everyone pitch in, including the men and women at the upper echelon of the company.

On this day, the distribution center was behind schedule because snow had kept many workers home the day before. Administrators were called in to help get back on schedule.

Like most retailers, L.L. Bean makes half of its annual sales in the last two months of the year. And retailers are more than happy to oblige late shoppers, especially since holiday sales haven't been especially strong going into the final shopping weekend before Christmas, according to Michael McNamara, vice president for research and analysis at MasterCard Advisors' SpendingPulse.

Nationwide, the final retail push on Friday and Saturday is expected to yield $34 billion in total sales, accounting for roughly 8 percent of the $400 billion in December sales, McNamara said.

After Christmas, and the ensuing returns, the entire planning process starts anew.

"It's interesting being a retailer. You plan all year for four weeks. This is where we make most our sales and most of our money. After Christmas, you feel like you just ran a marathon and now you get back on the treadmill and you've got to do it again," McCormick said.

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