It’s hard to escape the chatter claiming the death of the traditional retail store. And, when stores do go bankrupt, we hear the same explanation: Ecommerce and direct-to-home delivery has turned brick-and-mortar retail into an outdated model for serving customer needs and desires.
Not so fast.
Brick-and-mortar retail is far from dead—but the role of the retail location must change to maximize its value. Successful retailers are investing in transformative Fulfill From Store (FFS) strategies to integrate physical stores into efficient omnichannel retail operations.
Why? For one thing…people do leave their homes and enjoy visiting stores to shop, compare, try on products and pick up their orders. Equipping store locations to be strong, efficient FFS operations will help retailers satisfy each customer’s individual taste, product choices and delivery preferences.
Current State of Retail Systems
Between 2010 and 2014, ecommerce grew by $30 billion annually. Over the past three years, average annual growth has accelerated to $40 billion. In the last three months of 2016, Americans spent $102.7 billion in online sales, but that constitutes only 8.3% of the overall $1.24 trillion total in retail sales.
Forward-thinking retailers are shifting their attention back to in-store efforts and are seeking ways to create a more consistent and seamless customer experience. This calls for new investments in inventory data integrity and centralization to avoid the inefficiencies that can erode the customer’s value perception.
Let’s look at this scenario. A customer in your shoe store falls in love with a specific pair of shoes – but you don’t have her size. The clerk browses the inventory database, and another location in the chain “appears” to have that size in stock, so the customer places the order and has it home-delivered.
If your fulfillment process mishandles that delivery (e.g., the wrong size is shipped, or it turns out the item is not in stock, or the product is delivered too late, etc.), you just lost that customer’s trust and risked losing the customer permanently.
Many retailers recognize the risks associated with this scenario. In fact, recent industry research conducted by VDC Research indicates that retailers seeking to improve their FFS capabilities are focusing on three areas:
- Cross-channel order fulfillment and distribution: Consolidating distribution channels to improve efficiency and respond to customer demands.
- Customer engagement: Moving away from “the product” to the “in-store experience.”
- Inventory visibility: Having a comprehensive, real-time view of all inventory—not just in the distribution center but also in transit for store replenishment, in retail stockrooms and on the store floor—to help utilize inventory more efficiently.
Focusing on inventory visibility and accuracy across the supply chain must be a priority in making FFS a reality. The FFS concept is based on treating the retail location’s stock as part of the entire inventory that can fulfill any customer’s purchase—whether the item was picked off the store rack or chosen from the retailer’s online catalog for an ecommerce order.
With FFS, store associates can be equipped with user-friendly mobile devices worn or carried during their shift. If the retailer’s omnichannel order management system determines that the inventory in a store location is the best choice to fulfill the order, the store associate pulls the product and either ships it, or prepares for it to be picked up in the store—whichever the customer prefers.
To make this scenario possible, the inventory integrity must be complete, real-time and as accurate as possible. This includes several key elements:
Stock Receiving: Maximizing the accuracy of received stock—if it’s not accurate when it enters the store stockroom, it’s much harder to correct errors.
Stock Movement: Accurate and real-time tracking for each item within the store, from stockroom to store rack, to point of sale—including products pulled from store inventory and set aside for either FFS or for transfer to another retail location.
Stock Counting: Using mobile-based tools so retail associates can conduct “mini-inventories” by department or store, as part of an ongoing process to keep each store’s inventory as accurate as possible.
Click & Collect: Using tools to manage ecommerce orders for pick-up at the store. BOPIS systems, sometimes referred to as Click & Collect, efficiently handle picking orders from store inventory, manage order packing, labeling, parcel storage and retrieval, notify customers of order status, and complete the handover process when customers arrive.
Some retailers are using internal IT resources and are purchasing off-the-shelf mobile tools and hardware to handle these capabilities. However, VDC’s research indicates there are significant advantages in working with third-party suppliers who can provide comprehensive solutions, including hardware, software, integration with existing inventory systems and consulting.
Brent Felker is Senior Vice President Business Development, Retail Solutions for Peak-Ryzex