Retail Supply Chain Deemed Fully Optimized
By Bill Bittner, President, BWH Consulting
You heard it here first. Judging by the emphasis of the technology exhibits, there is no more optimization to be achieved from the retail supply chain. The focus seems to have shifted from data synchronization, warehouse management, and transportation optimization to demand side applications.
Last year was all about radio frequency identification (RFID) and renewed focus on efficient supply chain operations. It seems that this year the big emphasis is on in-store displays, price optimization and customer centric merchandising.
X06 is the multi vendor display where the latest technology is demonstrated. Last year (X05) it featured Metro’s implementation of RFID clear down to the item level and various vendors showed how RFID would improve the flow of products to the shelf. This year, RFID is still in the store but the emphasis is on improving the shopper’s in-store experience with targeted help and promotional messages.
Cascading “mist screens” reflect projected images in doorways that customers could walk through. Several kiosks were on display, including one by Experticity, which connects the customer to a “live” expert who helps them with difficult product decisions such as what wine to buy.
In the back office, price optimization is the rage with the Association for Retail Technology Standards (ARTS) request for proposal (RFP) being completed and both Radio Shack and H.E. Butt talking about their successful implementations. Details were kept private, but retailers confirmed the vendor claims of two to five percent in margins while sustaining or improving their price image. Price optimization solutions cover the whole item life cycle, including regular price, promotions, and markdowns. Pricing applications from DemandTec and Soft Solutions were mentioned.
Finally, customer centricity is the emphasis of many products designed to both inform and motivate the consumer. Customer data from cardholders is used to build a full life style
promotional campaign that recognizes an individual customer’s position in the life cycle as they move from baby food purchases to easily prepared frozen foods and home meal replacements.
Knowing the customer’s needs makes it possible to anticipate their purchases and guide the shopping experience.
Moderator’s Comment: So, what do you think? Have we wrung out all the efficiencies from the retail supply chain? Is it time to turn the emphasis on demand
I am being a little facetious, but I really have gotten the feeling from this year’s show that someone “declared victory” on the supply chain and redirected
the technology vendors to the demand side. But maybe this just reflects a better understanding of what can be derived from POS data. Data warehouses have become more common and
the insights they can provide to consumers are more actionable. The Internet and targeted in-store messages to the consumer while they are shopping give retailers the ability
to more strongly influence the purchase decision. With slowing population growth and a projected small rise in consumer spending, retailers need to direct spending in their direction.
Bill Bittner – Moderator