05 Feb #1 Ten years of… successful POS procurement for retail and the changes the industry has faced
Upright UK Ltd celebrates its 10th year in business this year. So to celebrate we’re dedicating some regular space on our blog to look at the changes the POS and retail display industry has witnessed throughout the time.
10 years ago, Upright UK started trading, offering a service wholly based on the overseas procurement boom the UK was experiencing. We interview Managing Director and Founder of Upright UK Ltd, Murray L Burton to get his thoughts on how the POS and retail display trade has changed and developed …
So Murray, when you started the business it was very focussed on procurement through China and Asia. What have been the main changes in procurement overseas that you’ve noticed through the last 10 years?
Back then the perception was that the further away from the UK you go for manufacturing, the cheaper it got … It did for a time, but now the tides have changed somewhat as in, the trend is moving back to manufacturing closer to home. UK production has seen a massive increase in our business in recent times, so it’s clearly more popular with our clientele. China is no longer the answer to everyone’s prayers.
What do you believe are the main causes of the change in overseas procurement, China in particular?
China is now in a very different place, with increases in labour costs being the main difference since everyone started to move in wholesale out there 10 years ago… Rightly so, it was very economically attractive back then.
There are still opportunities out there… very much so, but people are more discerning as the need for shorter orders, quicker turnaround and the implementation of last minute changes become more of a purchasing driver. Even though the Chinese factories now have a better understanding of how the global market place works … They still sometimes struggle with those issues. Brands want to go to places where people understand what they want, and do what they need, so now we’re back full circle into domestic and European procurement.
10 years ago the perception was that it was so much cheaper to procure in China and import in… Was that the reality?
Yes it was, absolutely. And in some circumstances it still is, but gradually the percentage is decreasing. It’s getting less and less comparatively competitive and anyone who preaches otherwise is deluding themselves.
You’ve mentioned the changes in labour costs as a prominent change these last 10 years, are there any differences from an ethical and humanitarian perspective?
Well, looking at it there has been a movement for the positive in China over the last ten years but, we always said we’d ever use a factory we weren’t happy to work in ourselves. So the change is really more an across the board answer. As a whole there have been some positive changes. Truth is we’ve always aimed to work to a good standard and we’ve achieved that.
Are there any political changes that have impacted Chinese procurement over the last 10years?
It’s always been pretty consistent, it’s communism with a small c. Labour law has changed in China which has encouraged positive change, it puts more of a focus on the owners of the factories to ensure standards are high.
How has importation for China changed?
It’s become more expensive.
Ok what’s the cause of that?
Pure economics really, reductions in the number ships with some companies when it started getting tough that drove the cost up really. Realistically if you look at our split of procurement now compared to 10 years ago, we’re currently sitting at less than 10% out of China with around 50% being UK based manufacturing.
The mixture and make up of what we do is very different to what it was 10 years ago. Back then we were dealing with large long-term strategic global purchases whereas now the trend has changed to being faster turnaround seasonal display campaigns. Now we’re much more about getting involved at the start and seeing a project through to delivery whereas 10 years ago we were wholly focussed on procurement.
The UK manufacturers cater better for the more dynamic productions that the market requires at the moment, but is still priced well enough to cope with the larger scale stuff when it gets approved. The emphasis in China is now more focused on building a healthy domestic market and trying to release the huge wealth of savings cash the population has. There is a better standard of living now, and the government is keen to encourage citizens to release that huge national wealth of savings that individuals have within their country.
What about changes in procurement through other areas?
The wax and wane was, Turkey was an attractive proposition for a while a few years back, but there are political issues there and the fact they’re not member of the EU sometimes hinders import / exports, so that makes it not so competitive as the rest of Europe. Within the EU transport links are in place and communication is less of an issue for the most part.
Are there any “hotspot” alternatives that have been looked at from a procurement perspective?
Poland is a good example, over the last ten years it’s peaked and troughs in and out of appeal. Manufacturers over there have clearly realised that they have to maintain competitiveness to attract overseas investors.
UK production still has its challenges and there’s no single fix solution but really it comes down to the project mix. Is cost, time, or quality the most important consideration? That’s really how you as a procurement specialist judge where best to source from. It’s a delicate balance to get right. To a client everything is equally important, but when you dig a little deeper into the brief there’s usually an overriding priority.
Ok so USA side? How has procurement changed over there in the last 10 years?
To be honest we’ve not done an incredible amount in the USA. We have co-ordinated some projects and purchased through American manufacturers and found that it’s quite an insular market place, US manufacturers don’t seem to like taking creative direction from Europeans haha!
Mexico is an interesting prospect, there are opportunities there but it’s about marrying the benefits. There’s no benefit currently for a European company to go to the American continents for procurement unless you’re supplying into American retailers.
So what have been the main changes UK side over the last 10 years?
Well the volume/size of orders have stayed pretty consistent, the dynamic of the order has stayed pretty much the same to be fair. The need is still there but the focus of the order is different.
Procurement has been the core or Upright UK’s business for the last 10 years …
That’s true the core has always been procurement. But we’ve developed an offering now that’s really gone full circle from where I started… in to a creative agency. I left a creative agency to focus on a wholly procurement offering and as it turns out, my business has moulded into a creative agency with procurement as an integral part of our offering. We’re now offering a “cradle to grave” service for retailers … and that sits well to be honest. At the time it was absolutely right to wholly focus on the procurement side of things, whereas now, it’s working very well offering the full mix. We’re getting traction and success out of it!
In terms of technology in procurement over the last 10 years, have there been any breakthroughs that have helped or hindered?
I don’t think there has if I’m totally honest with you, in terms of the procurement process; technology has stayed pretty solid and consistent. Innovation comes and goes in requirements, like interactive displays, static displays, integrated tablets etc. At the end of the day it really all boils down to good communication. As communication technology improves, so does the experience for us dealing with suppliers and clients, the same goes for the end product. Across the whole chain people just want good clear communication. That’s all we want, that’s all our clients want.
How has manufacturing technology changed in the last 10 years?
Sadly no, it’s still pretty much the same really.
What about materials and design trends?
Really, no too! There’s always a cycle of popularity and themes being used in store but material wise there’s still many techniques being employed that have been around for decades. Trends tend to follow a cycle of about 5 years we’ve found. From brushed metal to chroming to wood finishes to natural finishes. It all comes down to what the customer wants and what compliments, highlights and sells the products well.
Murray, Many thanks for your time.
Interview conducted by Jamie’s Marketing.