The growth of E-commerce and Multi-channel selling have increased Retailers’ need for Supply chain Automation and AutoID solutions. But with a flat consumer demand, traceability is even more a critical factor to improve margins and inventory levels.
The ‘web shopper’ and mobile user: drivers of the new economy?
Traditional approaches to consumer segmentation are becoming less valid, which is influencing the way retailers operate and their migration to multichannel or omnichannel models. According to common definitions, multi or omnichannel retailing allows a shopper to order from anywhere and have goods shipped to different locations according to individual preferences.
This trend has been fuelled by the ubiquity of the web and smartphones. It means customer expectations have completely changed and they now expect to switch channels interchangeably to order online and deliver to store, return online orders to a store, check stock availability and pre-order in store.
The omnipresence of the web as an essential selling platform and the incredible growth of smartphones as an additional communication tool, have completely changed things . Bigger retailers have understood this and respond rapidly but the same is not necessarily true for small to midsized retailers.
Real time visibility is a critical survival factor
To compete with large retailers, a small retailer needs to control its costs and inventory levels at all times . Today, a committed retailer small or large needs systems to visualise stocks on line, centrally integrated with warehouse systems for live monitoring product availability levels.
To execute an effective multi or omnichannel business strategy, a retailer needs to know what stock is in its many stores and warehouses and be able to quickly identify the most convenient way to get the required item to the customer for the lowest cost, in the shortest timeframe. A database showing stock levels real-time also drives web sales, mobile sales, ongoing store replenishments, payments, returns and ultimately cash flows.
Working like this requires a new warehouse infrastructure , with different ‘zones’ within the warehouse to fulfil the many different order variables – ecommerce fulfilment, click and collect fulfilment, store replenishments. Added to this list is the need to manage store transfers to support click and collect sales and incoming returns.
Reverse logistics influences mobile payments
Returns remain a hot topic because retailers are set up to sell, not process returns. As much as 33% of all sales have to be managed back into the supply chain. You can expect even greater volumes of returns because people are increasingly buying on impulse and customer expectations on service are high.
A good multichannel returns policy potentially means sales could be boosted as consumers perceive less difficulty in returning unsuitable goods if they really cannot afford them.
As an alternative to RFID, vision based technology can automate large scale returns management which is otherwise highly labour intensive, by limiting the amount of manual intervention required and maintaining high accuracy levels.
Mobile-payment solutions linked to returns will become widespread as they enable the retailer to align cash flow with stock management. Doorstep payments, combining payment on delivery or refund on collection options facilitated by mobile applications offered by logistics partners are now already available and a good example of this trend in practice.
The launch of many Auto-ID solutions for small to mid-sized retailers shows that they lack resources and visibility to sustain such a complex way of working. Without a fail-proof monitoring system and 24/7 support services, a breakdown in the delivery process is inevitable and can prove to be fatal for a retailer engaging into eCommerce and mobile payments.
“Retailers streamline products and focus on high performing products. You need 100% traceability to protect low margins and gives the edge against competition.”
Full traceability gives the leverage to survive in Retail
In an environment where sales volumes are not increasing, it is important to identify reliable performance indicators – e.g. generating the maximum profits possible per sale and measuring return on capital employed. Consequently, the emphasis for many retailers will be on streamlining existing product ranges to focus on high performing products, which deliver the highest return on initial capital employed.
Streamlining stock also means greater polarity between the types of items retailers offer, with more demand expected for either very low cost budget lines or super luxury items and fewer middle range options. This polarisation is mirrored in the high street stores where ultra discount and top end brands are the best performers.
High levels of competition means keen attention paid to cost cutting. In addition to rationalisation, costs can be reduced by cutting the volumes of stock held. This minimises risk but having less stock in the supply chain means faster turnaround levels from warehouse to store are required to minimise out of stocks. Techniques such as cross docking to reduce materials handling costs and speed up stock turnaround times will become more widespread.