Stores move to the front and center fulfilling customers’ expectations
A little more than a year ago, I asked in a RetailWire article if 2020 would be the year when retailers would institute supply chain improvements with an eye towards enhancing the customer experience. I recommended retailers focus on automating post-purchase processes, expanding fulfillment options and finding efficiencies to reduce costs.
That is, of course, still the story today, but with a much greater sense of urgency, especially for grocers. Dramatic shifts in demand, online ordering and the increased costs of safety and delivery are eating away at retailers’ top and bottom lines.
Amazon.com has the breadth, depth, volume and infrastructure to fulfill and persevere. Many large chains are also investing to address their respective supply chain challenges.
Other retailers, however, don’t have the resources of the big players and they would be well-served focusing on two key strategies in 2021: reevaluating the role of the store in their businesses and rationalizing inventory systems.
When it comes to physical locations, retailers need to make immediate changes in stores to meet the consumer demand for last-mile fulfillment options, including curbside and in-store pickup, and same-day and one-hour delivery.
They also need to be moving to longer-term adjustments to facilitate traffic flow, store layout, back-room, storage, packing, receiving and staffing. Shipping more orders from stores means products are closer to consumers and less costly to retailers. Target has said that shipping from stores has lowered its costs by 40 percent in this regard. Both Target and Walmart have earned high marks for being able to convert store networks to their advantage during the pandemic.
The need is also keen to rationalize inventory. Centralized merchandise systems (buying, management and analytics) offer a single view of goods across all shopping destinations and locations enabling retailers to find the right balance of SKUs in the places they’re most needed to profitably meet demand. It is impossible to have real time universal visibility across all nodes when systems, processes and channels are siloed. Here too, Target has stood out for combining store and on-line merchandising systems. Walmart, well-known for its supplier relationships, recently followed suit. Both chains have improved the flow of goods in the process.
While much is unknown about 2021, there is no question in my mind that e-commerce will continue to grow and logistics will be front-and-center. Doubling down on supply chain operations, insights and reconfiguring stores will improve customer service and create cost efficiencies.
- Will 2020 be the year retailers digitally transform their supply chain ops? – RetailWire
- Retailers need way more fulfillment space to keep up with booming online sales – RetailWire
- Do Americans think that Target is the easiest place to shop? – RetailWire
- What has made Walmart a shutdown star? – RetailWire
- Walmart shakes things up, further integrating online and physical store teams – RetailWire
- Target sees stores as key to meeting its distribution challenges – RetailWire
DISCUSSION QUESTIONS: Do you see stores become the primary focal point for retailers’ digital supply strategies going forward? How important is it for retailers to unite merchandising functions across the entirety of their organizations?