Retail Supply Chain Execution: New Requirements To Meet New Demand

March 2016 Innovative Retail Technologies

RSR and RVCF explain how true omni-channel retailing requires time, money, and technology and why predictive analytics and accurate measurement are critical to growth.

In our 2014 study on the Retail Supply Chain (Retail Supply Chain Strategy: The Next Big Thing), we learned a majority of retailers believed they would have to rethink their supply chain strategies to accommodate emerging cross-channel fulfillment opportunities. But we also learned that they were really just getting started on what could be the most challenging part of the metamorphosis from store-centric retail operations to true omni-channel offerings. For that reason, we were confident in saying that the next-generation supply chain is truly “the next big thing.” Today, our prognosis hasn’t changed. How so? Let’s look at the facts. Today, almost 60 percent of retailers sell online, and about one-third sell through a downloadable mobile application as well.

Omni-channel: Taking Time, Money, Commitment, And Technology

By Brian Kilcourse and Steve Rowen, managing partners, RSR

The digital and physical selling environments are converging. Whether this phenomenon is called “cross-channel,” “omni-channel,” or given some other label, consumers now routinely use their Internet-enabled (and frequently mobile) devices to find information about potential purchases. The selling channels have converged as far as consumers are concerned, and retailers are forced to catch up.

Striving To Gain An Understanding

When we asked retailers to identify the top three business challenges that are driving them towards selling channel convergence, there is surprising unanimity between Winners and others on most fronts.

Overall, the top challenge for retailers is that “a good customer experience in one channel is not enough to maintain customer loyalty.” That response has increased since we asked the same question in 2014 (from 39 percent to 49 percent), further highlighting that consumer expectations for a seam- less experience across the digital/physical divide are not leveling off. But there is one striking difference between over-performers and all others when it comes to business challenges. As we have seen many times, Winners maintain a relentless focus on the customer. In this case, Winners identify their number-one business challenge to be that the way consumers use different channels to make their purchase decision is unpredictable, but important to understand. Other retailers are watching consumers’ digitally enabled shopping behaviors too, but they have a very different take; their top business challenge is that consumer expectations outpace our ability to deliver cross-channel experiences. Winners are working to understand consumers’ new shopping behaviors, while average and under-performers are merely being buffeted by them.