Episode 5
The Retail Wave Makers | Mark Birnie, Harding+
In this week's episode of The Retail Wave Makers, Nadine welcomes Mark Birnie, Deputy CEO & Chief Operations Officer of Harding Plus, taking a deeper dive into the supply chain planning, forecasting and logistics that are an integral part of the cruise retail business!
Mark shares his secrets to managing the complexities of replenishing a cruise ship, ensuring the right product makes it to the right guests, on the right ship, on time.
Mark shares some of the lessons learnt from the recent supply chain disruption experienced world-wide & Nadine and Mark discuss how the cruise retail supply chain is likely to evolve in coming years to cope with increasing demand & innovation!
Transcript
Hello to everybody from around the world. Welcome to episode five of season two of the retail wave makers seatrade cruise talks podcast. My name is Nadine Heubel. I'm the Senior Managing Director of Travel Retail, North America at Newmark. But today I'm talking to you as the retail ambassador for Seatrade. Retail has been going from strength to strength in the cruise
Nadine Heubel:industry. And I'm grateful for Seatrade to have acknowledged this development by creating a retail Ambassador role, which I am very honored to have been appointed to. Part of my responsibility is to create further awareness for this exciting sector amongst us industry peers, and what better way to do it and creating our own podcast miniseries - The Retail Wave Makers Podcast. In this podcast
Nadine Heubel:series, I will work from different stakeholders of the cruise retail industry, cruise lines, retailers, vendors, consultants and media. And I will discuss with my guests the state of the cruise retail industry. We have a lineup of amazing guests, and we will hear from them firsthand about latest innovations, initiatives, challenges and their personal outlook of the future of cruise retail. And we
Nadine Heubel:will also get a little personal with our rapid fire questions at the end of the podcast. I'm super excited about today's episode as we are discussing a topic which is very often taken for granted, but in reality is super complex and most importantly, the backbone of the cruise industry, logistics and supply chain. I would even argue that the supply chain can make or break the success in cruise
Nadine Heubel:retail. I'm looking forward to talking to a true expert and supply chain champion Mark Burnie, Deputy CEO of Harding Plus. Mark joined Harding plus in June 2003 As Director of Retail Operation and has held a number of critical senior roles in the business before becoming Deputy CEO in 2019. And Chief Operations Officer in parallel in 2023. Mark has recently included the merchandising team into his
Nadine Heubel:portfolio, and has the overarching responsibility for supply chain planning, forecasting and logistics across the Harding business, ensuring the right product to the right guests on the right ship on time. Mark was also key part of the senior executive team leading a process post pandemic that saw Davidson Kempner as new business backers. This has helped Harding plus deliver rapid growth to reach
Nadine Heubel:the position of current market leader in terms of number of ships served. Before I hand over the mic to you, Mark, I just want to add that I very much like the sentence in your bio, which I think could even be the title of this episode. missing the boat is never an option in supply chain. So with this set, welcome to the show, Mark.
Mark Birnie:Thank you very much, Nadine. It's a pleasure to be here today. And can I just think it's a fantastic series that you've got up and running here to shine the light on cruise retail and all of the different dynamics within it. It's a pleasure to be here today.
Nadine Heubel:Great to have you Mark. It's really really amazing. And it's funny. We always you know, the listeners, we always have a little five minutes where we where we talked before. And the last three times I heard about vacations, all my guests went on to but this time we were talking about really a passion topic of mine and this was pets. So before we start tell us about Poppy just for a
Nadine Heubel:second.
Mark Birnie:Yeah, I was just saying to Nadine, before we started the podcast and apologize in advance that if there was any squealing or barking in the background, that would be from my 17 week old puppy Poppy. She's a black lab that joined us we've had an advert and about I think it's just over seven weeks 99% of the time she's an absolute delight but every now and then you might hear a bark
Mark Birnie:and a squeel in the background so I'm apologizing in advance for that.
Nadine Heubel:One very important thing that she's already a genius in all the commands she can play a role and all those things.
Mark Birnie:Absolutely. If I could get the rest of my life to operate the way that she does, I would be much much happier life would be much easier.
Nadine Heubel:Mark You know what I need to stop now because I could go on and we could make this from across retail podcast into a pet podcast a full hour with this. But that's not why are our listeners listening to the show. So let's go back on topic. It's all on me, my bad. So can you tell us a little bit about Harding Plus
Mark Birnie:sure!
Nadine Heubel:how many ships do you currently operate with how many cruise lines and as we are talking supply chain? There's also something I'm always super interested in how many different SKUs use do you have in euros?
Mark Birnie:Sure, no worries. So Harding's currently in operation, we're live on just over 86 ships that we've got now to date. We've got Around about 15 More that will come online between now and the end of this year. And then by the end of 2024, we're going to be up to around about 110. And that's across 17 Different cruise line partners. So quite an extensive portfolio. And you know, the
Mark Birnie:growth has been just phenomenal for Harding in the last 18 months, you know, where we had, obviously, the restart that we've had post pandemic, we've had the acquisition of new contracts, our cruise lines are also now back into the growth phase. So it's been quite a phenomenal period in the last 18 months. You guys probably know we operate globally, we've got a central office in Bristol. And then
Mark Birnie:we also have satellite locations over in Miami and office locations in Sydney. By the end of this year, we've got to have roundabout 290 people working for us land side and then circa 1400 shipboard teammates for us at sea at any one point in time. So it's quite a sizable operation. And you know, across those ships, we've got everything from a luxury vessel that's 500 square feet of retail space,
Mark Birnie:and has two team members on board up to 11 and a half 1000 square feet with 45 team members on board. And so the breadth and depth of the assortment, and naturally, then the impact on supply chain is incredibly varied to your question. It's like a moving feast. But if you think currently today, we're managing somewhere in the region around about 40,000 SKUs in our assortment across 12 different
Mark Birnie:categories. And obviously the size of the assortment and the range of it just varies from ship to ship, depending on size and scale. But it's an ongoing refinement. And as I'm sure you know, Nadine, the kind of drive to manage SKUs and volume of SKUs in a business and to drive that volume down is still at the forefront of our minds when we're managing SKUs.
Nadine Heubel:Absolutely, you know that I always feel that there is this one side where we want to offer a lot of variety and a great, great assortment. But then you also need to look at the other side from an operational perspective managing 40,000 SKUs is a complex endeavor.
Mark Birnie:It is it is and to your point for every SKU that you add to your assortment, there's a machine behind that has to manage that individual SKU.
Nadine Heubel:May I go back to one comment you made about the 15 new Ships you are adding this year. Is it all new build or did you also win in a new contract? Are you adding a new cruise line?
Mark Birnie:It's a mixture of both. So we've got some new builds coming online. Actually the eminent one is Oceania Vista, which comes online at the end of this month. So this is a brand new ship for the Oceania cruise brand. It's a not only a new ship, it's a new class of ships that that one is particularly exciting. Towards the middle part of the year, we're then looking at taking on a couple of
Mark Birnie:the Norwegian Cruise Line ships, their existing tonnage. So it's a mixture of the two.
Nadine Heubel:Okay, no, thank you for clarifying. But now let's go back to supply chain. And yeah, from a supply chain perspective, replenishing a cruise ship is I think one of the most complex tasks, as ships are what we call moving targets. And without revealing, of course, too much of headings plus a secret sauce. Could you tell us a little bit how your supply chain is organized? And also
Nadine Heubel:what I liked again, in your bio, there was something else which I really loved. And when you said that the supply chain is kind of the engine room. So yeah, looking forward to hear how the engine room works!
Mark Birnie:sure, sure. My prep around this one is kind of like when we get new people into our business. And I do like an introduction into operations and supply chain are described. As you know, first and foremost, we're a retailer our front of house product and experience rivals anything that you would see on land, it's comparable to see anything you'd see in a, you know, a really good
Mark Birnie:department store on land or within the travel retail sector. But the fundamental difference, and you kind of touched on it earlier, and it's a significant one is that those shops move. More often than not, they move on a daily basis. Most retailers have a fixed location that they deliver to, they can complete multiple deliveries in a day. If you think about a supermarket and how many times you
Mark Birnie:could deliver to a supermarket today. If that method of delivery or transport experiences a breakdown gets delayed on the road, you know, the store will not move. If that happens to us, the delivery could miss a Ship, it may not be logistically possible to get the goods to the ship then for several weeks. So the fact that those shops move just makes this supply chain side of it that much more
Mark Birnie:complex than what you would normally see on land deliveries to the shipper then really dictated by which country and the port that the ship is docking at the ease of access for us for the shipping routes. And they're predominantly via, you know, the three main methods either land, sea or air. And the lead time then of getting the product to the ship depending on the location that it's that if
Mark Birnie:you're going to layer on top of that the differing itineraries that go into all four corners of the globe and legislation. That's an important one that covers how and when you can load the goods, it makes it a really, really complex picture. But that's what makes it a little bit more challenging, exciting from traditional logistics. And that's one of the fundamental things about cruise and kind
Mark Birnie:of why I've hung around for as many years as I have, because it's the part that makes it that bit more exciting and interesting. So it's a very intricate planning process. So you've got to have robust systems that manage first of all the ships movements. So we capture that by day by ship by port by time, that feeds then into a delivery planning cycle where we select the most efficient ports or
Mark Birnie:routes to deliver to the ship that in turn feeds into our supply base. And then subsequently times of ensuring that we are ordering on time for a supplier to get it into a warehouse location, get it processed, get customs clearance, get it packed palletized and then onto a truck onto a vessel or at some stage also via air to get it to the ship on time. Just give you an idea 2022 We shipped out I
Mark Birnie:think was just over 20,000 pallets to 84 ports globally. During this year, we expect the outbound volumes are going to be around about 30% on 2022. Supply generally comes out from three main locations. So we have the central warehouse in Bristol. But then we also have a significant partnership on the three PL side with DSV in Miami, and then we do a lot of our freight forwarding also
Mark Birnie:through Geodis in Australia. So I guess that's kind of how we approach the supply chain at a high level. I think your question around the secret sauce, knowledge. It's King in the world of supply chain. When I talk about knowledge, it's around the whole maritime logistics side of things. So knowing about a ship, its itinerary these have access to a port the guest demographics to predicted
Mark Birnie:demand, local legislative requirements, those things can't be underestimated. And we've got a significant pool of talent across our warehousing logistics supply chain and merchandising functions that all have this intricate knowledge. It just plays such a significant key part in making sure that we get the right product to the right ship and on time. Single focus our mantra is always about focused
Mark Birnie:on ensuring that on ship availability as at its most optimum at every point in time!
Nadine Heubel:That was amazing and 84 ports and we're also really resonated with me a lot when when you said that you really also looking into the itineraries and looking where it is best to then replenish the ships. So it's it's a science.
Mark Birnie:Yeah, you think about just quick example today. So if you think about what's happening in the summer season, we have a lot of our ships that are based out of UK or European waters. You know, if we wanted to deliver to a ship in the UK in Southampton, for example, which is kind of the equivalent UK is equivalent to like to Miami from our Bristol warehouse, you know, you've got a lead
Mark Birnie:time of less than 24 hours to get it out of our Bristol warehouse and onto a ship. You're talking about getting it to Sydney in Australia from our Bristol warehouse, you're talking 14 to 16 weeks you add on top of that lead times getting supplier then and you you've kind of got every extreme then in between the UK version and the Australia version.
Nadine Heubel:Never a boring day in your life?
Mark Birnie:No absolutely not never.
Nadine Heubel:2022 has been really the year I would say of global supply chain disruption. What is this general status quo of the industry now? Are we now in full recovery or what's happening from a supply chain perspective?
Mark Birnie:Okay, in absolute honesty, you know, you kind of called out when I was when I joined the sector back in 2003. And I had a few years working at sea before then I think in the whole time I've been in the sector, I don't think I've ever seen the level of disruption that we've had in the last 18 months in the supply chain. I think most people would probably echo this it has been truly
Mark Birnie:unprecedented. I think on the upside though the earlier issues that everybody was seeing with sea containers, both from a cost availability and a non time element, those issues are starting to abate. Not fully, but they're almost back to normal. I think our bigger challenges continue to be in the Asia Pacific region, which is a little bit further behind. In terms of unblocking some of the delays
Mark Birnie:on the container side. But the US in particular for us has improved dramatically in the last few months to the point now where we're seeing very few delays in or out of the US and Europe so far for as this pose no issue. So I think to your question, yes, it's definitely turning a corner not quite 100% where it was back in 2019. But it's heading in the right direction. I think we are continuing to
Mark Birnie:work really closely with the supplier base to ensure that where we can the flow of product is maintained at all times. You know, you've probably seen it and heard about this within the industry and outside of the industry, you know, as suppliers are also experienced the same and similar supply chain challenges within their own business that's impacting supply and that ultimately impacts what In
Mark Birnie:terms of on ship availability, so we've definitely turned a corner there are far fewer challenges, thankfully than what they were 18 months ago. And I honestly think probably towards the end of this year, we'll be back to a position where we were 2019 into early 2020.
Nadine Heubel:I'm glad to hear this, I'm glad that you're saying we really turn the corner. Because I also feel that the mood in the cruise industry is much more upbeat.
Mark Birnie:Absolutely!
Nadine Heubel:Passengers are coming back, and so forth. So I think it's important that the supply chain is robust as well, so that we are not disappointing our guests when they come on the ships and they want to shop.
Mark Birnie:Absolutely.
Nadine Heubel:So now, as we said, we kind of turned the corner. How do you see the crew supply chain evolving? During the Seatrade Cruise panel, which happened two weeks ago, we talked about, you know, more pop up installation, home delivery? And is a candid question, is our supply chain ready to answer to these new customer demands? which will of course require even like faster turnaround,
Nadine Heubel:and completely new route to market when we talk about for example, ecommerce?
Mark Birnie:Yeah, I think you know, ecommerce will play a part in our future. It's actually there today. But that's initially really, it's predominantly through a click and collect proposition versus online and delivery to home. And we have that on a small amount of ships across selected SKUs. I think the balance for us that we've got to be very careful about is that you know, one of the key USPS
Mark Birnie:for cruise retail is our pricing proposition. So we operate in the majority of cases, while the chips are in international waters. And that allows us to trade free of any taxes, it's one of the key drivers to make the purchase on board. And it's our key differentiator to laminate I think that will always be the lead on board. I think by emphasizing that we can ensure a bit of a more by now
Mark Birnie:mindset as once you're off the ship, you're unlikely to see the same product at such good value as what you would do on land. That being said, the convenience of being able to order items pre cruise, so if you think I don't want to carry my suntan lotion through an airport, you know, I want to make sure that when I get on board the ship, my Chanel Number five is there ready. So those type of stock
Mark Birnie:up purchases or something that's an essential purchase that you'd want to buy on the cruise almost predetermined, where we can tap into that and get that transaction before they get onboard the ship. I think that's potentially where some of the opportunity lies. Outside of that post cruise, we do some work with some of our fine jewelry and watch vendors where we can facilitate some forms of
Mark Birnie:special orders. Fortunately, when you do that, there's then the element sometimes of taxes, VAT and duties that are involved in that, but we do operate that service. I think then secondary to that. You know, we've been, I guess, very focused on customer insights over the last couple of years.. Sue Gosling, you know, our Chief Brand and Culture Officer had set that wheels in motion several years
Mark Birnie:ago, you know, we have done over 20,000 different customer surveys. And you know, from that it helps us innovate in the right way. And working with the brand partners creatively, we need to keep the retail mix fresh. And the way to do that, which is what you kind of call that earlier is having popups getting more pop up schedules and having them on for shorter periods of time, more first at sea
Mark Birnie:and more product launches. And if you think about it, you know, the core of the cruise passenger, they're repeat passengers. So when they're coming back on board the ships, we need to give them a reason to return and you can dial that up by having the top of events and utilizing the public spaces in in a better way than what we're seeing today. I think you know, there's lots of talk around at
Mark Birnie:the minute about the opportunity that exists in the pre loved space. So a lot of work being done by a lot of brands now on pre loved leather, pre loved watches and accessories. And that is uprising to be a real global trend that we need to be on the on the back of so I think it's a combination of being able to tap into a little bit on the click and collect. But for us the focus is still has to be
Mark Birnie:about our key USP on board from that pricing proposition part.
Nadine Heubel:Yeah, and I fully agree with you. We we are still a brick and mortar business. And I think it's good that we are a brick and mortar business, that we need to look at other areas. But yeah, our focus would be on the brick and mortar side.
Mark Birnie:Definitely
Nadine Heubel:And Mark, for you what are the biggest challenges to get the right product at the right time to the ships? And what are you specifically doing to mitigate these challenges? And what can cruise lines and vendors do to support you?
Mark Birnie:Sure. I think this is the more immediate challenges which we touched on a bit earlier around time delays for shipping and in some cases supplier fulfillment. We've developed some quite significant reporting and visibility around our end to end supply chain and that's enabled us to foresee and react to some of these issues and much quicker and advanced than we ever have done before.
Mark Birnie:You know we've got fulfillment challenges, we're able to plan replacement products at short notice to ensure then demand this met, you've got to have the robust and strong relationships also then with the vendor base, which our guys are in regular daily weekly dialogue with them and get an early view, then of any challenges that may be coming and give us time to respond. I think if, if anything
Mark Birnie:that the last 18 months to two years has taught us and directionally where we're heading wherever possible supply and source your product, as close and as local to the ship's home port that you can get it, reduce your vendor and shipping lead times as far down as you possibly can, and use low risk routes of transport methods to ensure that the product gets there on time, that one has really been
Mark Birnie:key for us. And it's a key mantra that we're going to continue now over the next several years sourcing as close to home that the ship is and reducing those lead times from again from vendor and from warehouses is absolutely critical. I think from a cruiseline perspective, it's been something that I've spoken about for many, many years from even when I was in my role in operations, if you think
Mark Birnie:about it premise for a second from a from a retail operator, we know everything that we need to know from a transactional standpoint about the transactional data, we know the product that it's been bought, we know where it's been bought, the time it's been bought, the location it's been bought, the bit that's missing is there, knitting that together with the customer insight piece, or knitting
Mark Birnie:knitting that together with the customer demographic, if you can marry those two things together and knit them together much closely that drives better decisions around range, product, price propositions, guest propositions, service propositions, that ultimately feeds into the supply chain. And that's the thing what ensure that we get them the right product onboard to the right guest at
Mark Birnie:the right time. And for me, it's almost like the Holy Grail listing those two bits of data together would be a significant step.
Nadine Heubel:Again, 100% agree with you and having worked for a company which was not only in cruise, but also on the on the airport side. Sure, you know, in airports, you don't know which passengers are coming through your stores in cruise, you know, 95% of the passengers, you know, a week to four or five weeks ahead of time, which are going to be in your stores. And that's really, I
Nadine Heubel:think the big opportunity we all need to maximize!
Mark Birnie:fully agree.
Nadine Heubel:So before we go to our rapid fire question, I have one more question more out of curiosity for myself. So what was the most exotic destination you have ever delivered product to?
Mark Birnie:I had to think about this, I think probably Papeete in French Polynesia. Now beautiful location to deliver product to an absolute logistical headache and nightmare to get the stuff there but it's a beautiful destination. Once you get there. That's probably the most exotic that we've ever done so far.
Nadine Heubel:Next time you need to go there I volunteer I have my suitcase I carry it.
Mark Birnie:I'll happily deliver the pallets there. No problem.
Nadine Heubel:Are you ready for the rapid fire questions?
Mark Birnie:Let's go.
Nadine Heubel:Favorite cruise destination?
Mark Birnie:Oh, Sydney by far I think it's the most outstanding harbour in the world to sail into it's the best way to see that city is to sail into it past the Harbour Bridge and seeing the Opera House. It's just magical.
Nadine Heubel:So what's your favorite location to unwind on a cruise ship?
Mark Birnie:anywhere that makes a good Negroni?
Nadine Heubel:I love it. Buffet or a la carte breakfast?
Mark Birnie:Definitely a la carte, but on occasion it depends how many Negronis I've had the night before, may have to go to the buffet to get it quicker.
Nadine Heubel:Bingo or trivia?
Mark Birnie:Bingo definitely 100% Oh, yeah, yeah, bingo. If it's Drag Bingo, even better.
Nadine Heubel:Cool. The last product you bought on a cruise ship?
Mark Birnie:Oh, I bought on my on site bracelet off one of our ships actually about two months ago.
Nadine Heubel:Amazing. And last question, which retail operation on which ship? Would you like to give kudos to within your own organization?
Mark Birnie:Hmm. So listen, I've worked at sea, as I mentioned earlier for a few years and I led that front of house operations in Harding for several years. So I know that side of our business inside and out and still today, it astounds me the sheer hard work and determination that those onboard teams have to deliver that exceptional experience to our guests globally. It's a it's an
Mark Birnie:incredibly demanding place to work. And for that, I think I'd give kudos and thanks that every single one of those shipboard teams that we've got today.
Nadine Heubel:That's amazing. That's a great finish to this podcast episode.
Mark Birnie:They're definitely our heroes.
Nadine Heubel:Perfect. Mark, thank you so much for being on the show today. This was amazing, super insightful. And I also want to give a big thank you to Poppy, who was so quiet and we didn't hear anything. So thank you Mark again.
Mark Birnie:She managed to behave herself!
Nadine Heubel:she did.
Mark Birnie:Thank you, Nadine for giving us the opportunity it's a pleasure to do it today!
Nadine Heubel:absolutely!
