International Fashion Marketing

Retail Logistics

Executive Summary

The below report discusses the logistics issues and deficiencies which is faced by the Vertigo as identified by the new appointed CEO. The report discusses in detail all the logistics related issues. After identifying the issues, the report also proposes the new logistical system to overcome the deficiencies of Vertigo logistics.

Also in the end the report discusses some additional strategy that would be required by the Vertigo to effectively execute the new implemented logistics system.

Deficiencies in Logistics Operations of Vertigo:

As the Vertigo is in operation since 1962, it had a good market base till 2004. Because of one of the oldest clothing chain in town, the operation of business had profitable figures on its income statement. But as the world is in a phase of continuous innovation and advancement, the fight to retain the market share became difficult for the Vertigo in 2004 when two of its competitors identifying the needs to change the processes the operation was done, developed a top notch strategy to greater compete in the market.

The question arises is this, what caused the Vertigo to face this severe decline in its profitability and sales. The answer is the company logistic operations which are still working on the pattern of 1962. As the twentieth century is about innovation and advancement, that would allow the business to use the potential of new innovations resulting in greater profitability and ROI.

The first and foremost problem is that Vertigo is operating with only three warehouses which are quite small in comparison to their competitors. If it is looked on the figures, it can be clearly concluded that Vertigo, which currently operates with three warehouses based at London, Leeds and Glasgow with an area of 2200, 1400 and 1200 square meters respectively. Whereas the competitor Bond has increased its capacity from 8000 to 12000 square meters which is consider as the most aggressive approach which has enabled the Bond to increase its sales to 92%.

Also the other competitor, DJ has also built a new distribution center which is covered in 10000 square meters. Both the competitors have totally wiped out the Vertigo in terms of distribution areas. The differences can be clearly seen, smaller distribution centers will ultimately be led for lower sales because of the small capacity of warehouses to stock the items in it.

Whereas large and big size distribution centers will allow the company to include all the potential stocks, greater satisfying the customers' needs and providing greater sense of availability of entire stocks at one shop. Therefore the first deficiency is related to the distribution area which is relatively small when comparing with its competitors.

The second is related to the capacity and handling of all the important and imported products. As the Vertigo with the largest distribution center at London which has to work with its full capacity because of the dramatic increase in the sourcing products from South and Far East Asia. This warehouse is currently operated at full capacity and still ...