The consumer used to follow a fairly simple purchasing process: they browsed the internet and bought in the bricks-and-mortar store. Now that the number of sales channels has grown significantly, the selection, purchase and delivery process should be at least as fast and certainly more streamlined. Customers expect to receive a seamless experience regardless of the channel and continuously demand shorter lead times or different delivery options. To achieve this, an integrated supply chain is essential. But what role does the physical store play in today’s consumer market? In this post, we’ll take a closer look at several focus areas of a Unified Supply Chain.
We sometimes hear nostalgic musings that everything used to be simpler, and in the field of supply chain management, that may be the case. The customer travelled to the physical store and had to be content with what was available. Today, within a much more complex ecosystem of different sales channels, and increasing customer expectations, companies need to organize their supply chain for agility. So the bar is constantly being raised. Today, being constantly ready to respond to the customer’s demands requires an overarching view and a strategic approach.
Customer first
New service models and sales channels require transparency and traceability as an enabler. It are important elements of a satisfying omni-channel experience for customers, in terms of inventory visibility as well as “responsible buying” encouraged by regulations. The first step is to move from a cost-centric to a customer-focused and service-oriented supply chain that puts the customer first, offering a coherent purchasing journey, regardless of sales channel.
Physical stores are more than P&L centres
Our experience with clients reveals that many retailers still measure their success per channel or shop. But the profit and loss statement (P&L) of a retail location doesn’t tell the whole story. A bricks-and-mortar presence also adds value by offering additional services and increasing brand awareness within a catchment area. It’s no coincidence that successful online players have also chosen to open physical retail outlets in strategic locations. Do they see these as an essential source of revenue? Not necessarily. They often see bricks-and-mortar stores more as an opportunity to offer the customer an experience, a place where they can see, feel and test the products. Physical stores increase trust in the brand and literally and figuratively bring the product offering closer to the customer.
Micro-fulfilment centres
The only way to achieve same day delivery is to have stock in close proximity to the end customer and in most cases retailers already have this in abundance in retail stores. That’s why retailers are increasingly turning their stores into micro-fulfilment centres, allowing them to process more online orders faster. This gives retailers an extra supply channel, which benefits from proximity to the customer and speed of reaction. Brands opening new stores often explicitly include this logistics function as a criterion when choosing a location. The ideal retail location not only has a broad customer reach but also offers the potential to efficiently manage logistics processes.
In this model, the physical point of sale, which is sometimes regarded as “unwieldy” in retail, contributes to the agility of an organization. Here, retailers no longer include only the sales figures in their reporting but also the logistics performance as a KPI. They therefore look at profitability and service provision from a broader perspective rather than focusing on that one point of sale or that one delivery option.
Impact on sustainability
When it comes to KPIs, no organization can ignore sustainability. In-store fulfilment offers several ways to reduce carbon footprints, for example by offering the option to pick up online orders in store, avoiding the use of additional packaging. If the customer wants a delivery, the physical store will likely be much closer to the final destination than a large fulfilment centre. This may also allow sustainable delivery via e-bikes or e-cargo bikes.
