Analysis

INTERVIEW New Hermes Chief Transformation Officer plans upgrade to premium brand

Like many couriers, Hermes has seen a vast surge in shipments during the pandemic, buoyed by the global shift to ecommerce. The company is now looking to reach the “next level of excellence”, says newly appointed Chief Transformation Officer Fash Sawyerr.

As a 10-year veteran of the private equity industry, Sawyerr has experience of working closely with companies in the portfolios owned by funds to drive their turnaround strategies and create value. He also has direct operations and logistics experience from his consulting work at Bain and Company.

Sawyerr’s goal at Hermes is to take what he describes as a “successful, very strong, high growth” business and take it further. His first few months will be spent defining the strategy and initiatives, as well as setting up mechanisms for tracking and reporting on performance.

His appointment follows most of Hermes’s UK business being acquired by US private equity firm Advent in August, giving it a new injection of financial heft.

There are several pillars to this: the goal is creating a premium service while keeping Hermes’s low-cost offering, enhancing the brand’s reputation and entering new markets.

Building a premium offering will involve launching new digital products to increase the ease of use and customer centricity of services. In addition, Hermes will look to improve how retailers interface with it to be more efficient and easy. Retaining the current cost proposition will be about boosting efficiency in the network.

Also key is investing in the company’s brand reputation. A recent MoneySavingExpert poll found Hermes ranked second last amongst major delivery companies in terms of offering a “great” or “ok” service, ahead of Yodel, which has also been working to improve its brand perception.

“We’re going to be investing significantly in terms of operations, customer service and technology to move the dial in terms of our quality and customer expectation,” says Sawyerr.

Sawyerr views the brand project as a one-to-two year project, with all the initiatives launched within 12 months.

Is it possible to combine being a low-cost operator with being a premium one? Sawyerr says that while he thinks the gap in service between Hermes and the likes of DPD is overstated, there doesn’t need to be a trade-off between quality and cost.

“Hermes has got to the scale in the market where there is a lot of opportunity to drive even further operational efficiency.

“We can reinvest some of the gains into product development and overall customer experience.”

He says this mission to enhance the brand value is to appeal to both retailers and consumers.

“If our service levels are not up to standard that impacts the retailer brand – customers think about us but also the retailer they purchase it from.”

An enhanced brand will also impact the consumer-to-consumer part of Hermes, the Hermes Send website and app.

Markets where Hermes would like to expand include its Parcel Shop pick up and drop off (PUDO) and locker network, as well as in cross-border shipping to and from the UK.

“That’s a very big high growth market – we have a relatively small position in that market.”

Another priority is sustainability, which “for us has risen to the highest strategic importance, for obvious reasons.”

Sawyerr says that while Hermes has the second biggest compressed natural gas (CNG) fleet in the UK and electric vans in operation in central London, it wants to go further with that. While he won’t share details, he says that the company is going to be “fairly flexible” when choosing technologies.

“It does have to be a multi-faceted strategy. The market, supplier base and government regulation all change rapidly. I think we have to have some diversity in our portfolio; if you just back a single horse and these things go against you you find yourself exposed.”

The immediate priority is to continue deploying CNG trucks and electric vehicles, but the PUDO network will also have a role to play here.

“Once we get our network to point where over 70% of the population are within a five minute walk of a parcel shop or locker – at that point the convenience is starting to approach that of home delivery.”

This will also help to reduce emissions, although Sawyerr says that there is work to be done to educate consumers about the benefits of this.

Sawyerr will also oversee Hermes’s M&A activities, part of the market where he says there is “a lot of activity”, including selling of shares and consolidation in the form of large players acquiring specific technologies.

“With those two drivers going on there are interesting opportunities in the market – it’s not necessarily cheap at the moment, valuations are pretty elevated.”

While Sawyerr declines to share specific details, he indicates Hermes will find complementary technology that can help accelerate growth in its major pillars.