Is inventory or staffing the biggest omnichannel challenge for stores?

Discussion
Photo: Walmart
Oct 31, 2017
Tom Ryan

As the lines between online and in-store continue to blur, retailers see order fulfillment (29 percent) and limited staffing (29 percent) as equally difficult challenges at the store level, according to JDA Software Group’s second annual “Voice of the Store Manager Survey.”

The findings were based on a survey of 252 U.S.-based retail store managers in August.

Of those surveyed:

  • Forty-four percent indicated their stores offer buy online, ship from store;
  • Forty-one percent offer buy online, pick up in-store (BOPIS);
  • Forty percent offer buy in-store, ship to home;
  • Thirty-eight percent offer buy online, return in-store (BORIS).

The survey found that many stores are hiring extra staff to pick, pack and ship in order to support these functions. Among those surveyed, 65 percent had staff allocated to support BOPIS; 64 percent to support buy in-store, ship to home; 61 percent for buy online, ship to store; and 49 percent to support buy in-store, ship to home/store from another store.

Retailers see inventory visibility as critical to meeting customer fulfillment timelines, according to the report. Forty-one percent of store managers, for instance, believe lack of visibility across inventory is the biggest difficulty when it comes to BOPIS services.

Thirty percent are unsure of what to do with the additional inventory received through BORIS, and lack direction as to whether to keep the extra stock at the store, return it to a distribution center or even another store. Additionally, nearly 30 percent of store managers reported a staff-related concern with regard to BORIS. Overall, two in three store managers reported some difficulty with the service.

Around staffing, the survey found that over 40 percent of seasonal holiday hires will be for fulfillment at stores/warehouses and not customer-facing. One-third planned to increase seasonal hiring for BOPIS.

DISCUSSION QUESTIONS: Which omnichannel function (BOPIS, BORIS, fulfill from store) do you see presenting the biggest challenge for physical stores? Is staffing or inventory visibility more complicated to resolve for stores?

Braintrust
"The more you ship from stores and return to stores, the easier it is for the inventory to get out of whack."
"Technology, even AI, will not take the place of store-level service."
"Hardly an either/or. It’s easy enough to budget more staff but to go find and train the team and offset the expense elsewhere …"

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30 Comments on "Is inventory or staffing the biggest omnichannel challenge for stores?"

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Dave Bruno
BrainTrust

To me, this is a no-brainer: staffing is the greater challenge. Store staff are being asked to do so much more without commensurate increases in payroll. They have to deal with the logistics of in-store fulfillment and returns, they have to juggle fulfillment tasks with all the other tasks they already are expected to perform, and they have to be capable of delivering highly informed and personalized experiences when helping customers. So while managing inventory is indeed difficult, in my opinion, staffing is the far greater challenge facing stores.

Phil Chang
BrainTrust

Buy Online Return In Store (BORIS) is the biggest challenge in my mind. BOPIS and fulfill from store have foresight and tools that allow for retailers to see what is coming. The challenge with those two is just speed. BORIS represents a significant lack of visibility because you cannot know where the consumer will return, what they will return or how they will return.

Stores will have to have the ability to be agile with their returned inventory, and have outlets to move it quickly before returns age and start taking up a ton of space.

Inventory visibility (of returns) is going to be very complicated for stores. Liquidating or solving returns will be an issue, and I think will test a retailer’s resolve for “endless aisles.”

Ken Lonyai
BrainTrust

Inventory vs. staffing is a chicken or egg question, particularly regarding BOPIS. Experience is all that matters to customers, how a store makes delightful/fulfilling experiences happen is of no consequence to them.

The biggest challenge for retailers is dependent upon their specific inventory/logistics systems and return policies. BOPIS for one may present more challenges while BORIS may be difficult or costly for another. In fact, store by store the problems can vary. For example, I had a large Home Depot order that required a number of items to be returned. At my local store, it took nearly 1-1/2 hours to make the return (yup – article coming!), so trying two other stores as an experiment, about 4 minutes each. It’s a matter of corporate and local management working together to make experiences frictionless by truly walking a mile in the customer’s shoes. If they do that, they likely will benefit from better efficiency and cost savings on BOPIS, BORIS, and fulfill from store.

Mark Ryski
BrainTrust

All variations of store fulfillment are challenging and the retailers that are best able to master this new fundamental retailing skill will have a competitive advantage.

Successful retailing and successful warehousing require different skills and this is a delicate balance clearly many if not most retailers are struggling with. This will continue to improve over time as retailers painfully learn their way through this. Of the two challenges, I would say that inventory visibility is the more immediate and complicated issue to solve. Managing inventory effectively in an omnichannel world requires an inventory management capabilities that many legacy systems are incapable of managing today and any change to a core system like this will be complicated, expensive and urgent as retailers scramble to meet consumer expectations.

Dave Wendland
BrainTrust

Staffing is key. Retailers must redefine the role of staff and train them appropriately to manage the new demands on their operation. However, this must go hand-in-hand with refinement within supply chain areas such as inventory management, fulfillment, logistics, and technology.

Cameron Conaway
Guest

Well said, Dave. Too often, it seems, training happens in batches. Staff training should be as continuous as the supply chain refinements you mentioned. This becomes an impossibility, however, when retailers rely on waves of seasonal/temporary hires.

Charles Dimov
BrainTrust

BORIS really should not be a challenge for stores. With a good order management system, in-store returns are easy to track, process and get back on the shelf — quickly. Fulfill-from-store needs a little more support. It is perfect for getting inventory into the field (where 91 percent of customers shop (NRF, 2017). However, this requires staff that know how to efficiently pick, pack and ship, and it also needs an area dedicated to doing this. Frankly you need some room to pack boxes.

Finally BOPIS is a big bonus for the stores, because it brings more customers right into the shop. When they are in for a pickup 58.8 percent (OrderDynamics, 2017) will buy more goods — a BIG WIN for the retailer.
BOPIS does require some training for in-store staff. You also need a place to store goods that are waiting to be picked up. But it is definitely worth it for those extra sales!

Phil Masiello
BrainTrust

Supply chain product flow and inventory visibility should not be an issue for a retailer of any scale today. There are so many great systems to provide this information in real-time and track inventory from store to store, warehouse to warehouse.

However the issues raised in this discussion seem to be more about staffing or training of staff. That is the biggest challenge. If the staff does not know what to do with inventory or how to direct inventory, that is a bigger challenge.

Technology can solve the problems of taking orders, moving product from place to place and providing in-stock visibility. But technology, even AI, will not take the place of store-level service. That is where most of the retail problems occur today. The person you interact with at the store level represents the retail brand. If the retailer does not train or provide the tools, then all the inventory systems in the world won’t service the customer properly.

Chris Petersen, PhD.
BrainTrust

Inventory is a very expensive challenge for retailers executing omnichannel. Staffing is CRITICAL for store survival.

Today’s customers can buy virtually any product, any time and everywhere. What they can’t get online is the same customer experience and engagement that quality staff provide in-store.

That is not to say that “bodies” on the floor will save stores. The roles of staff and store managers must change from being transactional to transformational in terms of customer experience. Herein lies the greatest challenge for retail executives — will they invest in the talent, training and support to make staff the differentiator that enables stores to survive?

Nir Manor
BrainTrust

BOPIS presents the biggest challenge for retailers because in order to fulfill online orders well and fast enough, retailers must have 100 percent accurate inventory shelf management. If items are not on the shelf when store pickers need to prepare the pickup package for the BOPIS shopper, it creates few problems: first it takes more time to pick and pack, second the pickers need to replace the missing SKU and then the shopper that doesn’t get the item he ordered may be less satisfied with the service. Therefore, in order to do BOPIS well retailers need to invest in technology that will give them real-time shelf inventory visibility.

Max Goldberg
BrainTrust

The biggest issue facing retailers’ omnichannel efforts is the need to keep real-time inventory. Consumers expect items listed on websites and in ads to be in-stock, especially when utilizing BOPIS services. Perfecting these systems takes time and financial resources. In the current, fast-paced retail environment, many retailers large and small can’t keep up.

Paula Rosenblum
BrainTrust

The data tells us it’s inventory. The more you ship from stores and return to stores, the easier it is for the inventory to get out of whack. It has been a mess for a few years now. Staffing is easier to solve.

Michael La Kier
BrainTrust

The biggest challenge for any of the omnichannel functions will be staffing. Inventory management can be handled by improving technology, but staffing (hiring, training and keeping good people) is always a significant issue for retail. A rude or inefficient staffer can destroy the relationship between a shopper and a store. Ensuring enough staff is on hand to manage the various models will be important going forward.

Peter Charness
BrainTrust

Hardly an either/or. It’s easy enough to budget more staff but to go find and train the team and offset the expense elsewhere … inventory logistics for fulfillment from any channel is a longer term, physical network and systems issue, not a short-term fix either.

It’s interesting that the statistics show more than half of all retailers don’t offer these now expected services, which I guess goes to show that if it were easy to do, everyone would be doing it by now.

Dick Seesel
BrainTrust

I agree with the comments that staffing is the biggest issue, whether a retailer is offering BOPIS/BORIS or not. While two-thirds of surveyed stores may claim that they have added staffing to handle omnichannel tasks, the anecdotal evidence suggests otherwise. (I’ve talked to a friend who sells shoes at a local department store; she spends more time now fulfilling ship-from-store orders than servicing customers.) Given the stagnation in most large stores’ brick-and-mortar business, it’s not surprising that they would try to squeeze as much productivity out of existing payroll hours as they can get away with.

Bob Amster
BrainTrust

All the omnichannel functions represent an additional responsibility for the in-store staff and this is one of the biggest challenges; how to increase staffing commensurately with the additional responsibilities in-store staff have to fulfill. As to inventory management, BORIS represents the biggest challenge because of the unpredictability factor, but a robust inventory balancing module across the enterprise can address the re-distribution of returned items as needed. Real-time inventory data by store is the optimal requirement for complete customer satisfaction.

Neil Saunders
BrainTrust

The main challenge of omnichannel is that it disrupts traditional retail models: from staffing to inventory to financials, most old-school retailers are not seamless across all of their routes to market.

Inventory is a prime example. Not many retailers have a single view of stock in real time. Yet omnichannel requires this if functions like BOPIS or reserve online are to work.

Financials too are less meaningful than they once were. If stores support online sales, how is this — and the commensurate increase in costs from staffing — reflected in the store based P&L?

What’s needed is a more integrated view of all aspects of the operation, which means upgrading systems and processes.

Harley Feldman
BrainTrust

While BOPIS, BORIS and fulfill from store are all challenging fulfillment issues, BOPIS is the biggest challenge since the customer will be coming to the store to pick up their purchase at their covenience. The item must be there when the customer arrives, and delivering the item to the consumer needs to be quick and painless. This requires the retailer to know where the inventory is, moving it to the right store and being ready for the customer when she shows up — all very challenging IT and personnel issues.

Both staffing and inventory visibility are challenging. Staffing is a cost and training issue and inventory visibility is a process, a technical and a cost issue. These costs will be different for each retailer, but both must be addressed for successful fulfillment.

Herb Sorensen
BrainTrust

Both problems predict that retailers will get no greater reward for the millions being spent on BOPIS/BORIS than they had with similar efforts geared to smartphone apps. The reason is that they are trying to compete with Amazon by pasting BOPIS/BORIS onto a system totally NOT designed for it.

Never forget that brick-and-mortar retailers are basically merchant warehouseman, relying on unpaid stock-pickers, aka shoppers, to “come and get it!” There is absolutely nothing in their highly refined, carefully honed and highly successful operational plan that is prepared to deal with an Amazonian challenge. Brick-and-mortar retailers’ operations and logistics are built on pallets, while Amazon’s entire system is built on SINGLE items delivered to SINGLE shoppers.

Shoppers do NOT buy categories (what brick-and-mortar retailers manage) but single items (what Amazon sells, and manages).

Cathy Hotka
BrainTrust

Dave Bruno’s right. Many stores were understaffed before shipping and fulfillment entered their sphere. The answer to the question of inventory vs. staffing is that both are in play and are critically important to a satisfactory store experience … and there is much work to do.

Dave Nixon
BrainTrust

This is a discussion on “investment in tools or in people.” The systems are not set up to accurately represent inventory across all distribution (and return) options, as of yet, and the people are not trained (nor paid) to be so cross-functional in so many new aspects of the store. Once retailers start to specialize their associate roles and pay appropriately, the team that is expected to deliver a positive CX is still going to be a major struggle for retailers. Investment should ALWAYS be in people first.

Ralph Jacobson
BrainTrust

A physical store’s two largest controllable expenses are COGS and labor. This has been the case forever. The trouble is, retailers are still struggling to match labor to the exact tasks required at exact times, as well as struggling to optimize inventory visibility, based upon current out-of-stock conditions plaguing the industry. So, when these two expenses are out of whack, nothing else truly compensates. With the latest blockchain technologies and “smart” machine learning supply chain tools available today (for free or very lost cost, BTW), inventory visibility can be managed all the way to the end consumer.

Now that you can see your inventory, let’s get the staff trained and scheduled to get it in the hands of the consumer. With high employee turnover in retail, ongoing education is required to ensure all elements of BOPIS, BORIS, etc. are executed effectively. Beyond that, leverage tools that integrate with inventory management tool to define the optimized store staffing level.

This CAN be done these days. You just have to get tactical.

Shep Hyken
BrainTrust

It’s not that one that one channel provides a bigger challenge than another. The challenge is balance. The ability to know how to staff, how much inventory belongs at different locations and other related logistics issues is a balancing act. It takes data and experience to get the right answer.

As for the staffing versus inventory question, staffing is more complicated to resolve. You can always pull inventory from a nearby store or distribution center. Harder to do that with people.

Peter Luff
BrainTrust

At this stage of the life cycle I would say it’s staff; hiring and empowering great staff can overcome the challenges new processes and systems always present. Over time the process for BOPIT and BORIT should evolve taking the pressure off of staff, but right now while you are working it all out, having a great team will make all the difference and give you the chance to mature to operational excellence.

Peter Luff
BrainTrust

At this stage of the life cycle I would say it’s staff, hiring and empowering great staff can overcome the challenges new processes and systems always present. Over time the process for BOPIS & BORIS should evolve taking the pressure off of staff but right now while you are working it all out having a great team will make all the difference and give you the chance to mature to operational excellence.

Cameron Conaway
Guest

Industry analysts are intrigued and excited by the blurring of in-store and online, but when 30% of retailers are “unsure of what to do with the additional inventory” and are reporting “staff-related concerns” it’s clear that we’re neglecting to tell another side to this story.

The blur, for many on the frontlines, is immensely challenging—and inventory and staffing are only two of those challenges. This is not something they’ve dealt with before, and there’s not a blueprint or even set of best practices for how to navigate it. While the major enterprises grab the headlines, typically with writers layering on the praise, many scrappy SMBs are desperately trying to rethink their existing model so they can survive.

Inventory or staffing? Both, and then some.

Paul Donovan
BrainTrust

I think this question raises an important consideration, namely it depends on the state of current play. In many cases, retailers have indeed invested in technology solutions for supply chain and even distributed order management, but they are not necessarily all controlled in the same org structure. E-commerce may have developed separate processes and inventory systems than stores. Some retailers may have better training programs or retention abilities which make it easier to handle the omnichannel situation. It really depends on the retailer’s excellence in any of these areas but suffice to say, they are equally important and interconnected.

Ed Rosenbaum
BrainTrust

Staffing has always been more of an issue than store inventory. The only place it might be close would be a super Walmart. They seem to continually be out of inventory. The staffing issue is mainly because the store’s hiring and training practices are below acceptable. If this could be better managed, then I would think some of the inventory issues would be easier to resolve.

Ken Morris
BrainTrust

Inventory visibility and staffing/processes are both big challenges in properly executing BOPIS. The one that is the greatest challenge depends on the retailer’s technology infrastructure and the quality of their employees.

Without the right technology to enable enterprise inventory visibility, retailers can’t even offer BOPIS to their customers. And if the inventory visibility is not accurate, it presents other big problems — dissatisfied customers.

Understanding inventory in real-time makes BOPIS possible, but the technology is only one leg of the stool. The others are people and process and if you don’t do all three well, execution will suffer. In many cases, training sales associates on new processes is a challenge, especially in stores where the associates are on commission and fulfilling a BOPIS order doesn’t help their commissions. Retailers need to refine their processes (including compensation plans) and train their associates to improve the efficiency of BOPIS. It needs to be a priority — beyond special parking spots and pick-up counters.

gordon arnold
Guest

The use of distribution software for omnichannel is industry predominant and in and by itself a challenge of monumental proportion further compounded with the manipulation of said software by the minimum wage employee. Add to this an increasing number of retail executives that buy into the nonsense of computer compensation for inferior input performance by functionally illiterate low wage employees now coined as artificial intelligence.

Computers do not, have not and will never own abstract rationality otherwise known as intellect. Successful omnichannel requirements must first own a universally accepted definition and procedural methodology. Following that there is the necessity to have direction from sources with a keen understanding of the objectives they oversee as well as the ability to recognize potential critical impasse and the ability to create, test and implement solutions. There is no reliability in faux intelligence.

wpDiscuz
Braintrust
"The more you ship from stores and return to stores, the easier it is for the inventory to get out of whack."
"Technology, even AI, will not take the place of store-level service."
"Hardly an either/or. It’s easy enough to budget more staff but to go find and train the team and offset the expense elsewhere …"

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