The changes in consumer shopping and purchasing practices are stretching retail inventory pipeline to it’s limit and retailers must change their strategy in order to support the changes. These change demands require a multi-echelon inventory strategy that senses and responds to inventory demands across channels and and locations. This strategy next requires changes to the retail inventory pipeline to adjust to the multi-echelon requirements. These changes to the retail pipeline are key requirements to a successful multi-echelon inventory strategy. The inventory pipeline starts with the suppliers and ends with the consumer and one of the key changes to the pipeline is increased flexibility demands in consumer delivery capabilities.
The retailer must change their shopping and sales delivery strategy to support a truly omni channel marketplace. This requires a flattening of the channels and the capability to quickly and efficiently move inventory across channels. We have seen recently the decline in retail brick and mortar sales while the eCommerce sales have increased to compensate for the reduction. This tells me that consumers have embraced the omni channel market and capabilities to support their own changing lifestyle requirements resulting in reductions in store sales and increases in eCommerce sales. These changes have placed enormous pressure on retailers to adjust and most retailers seem to be moving in the direction of divesting store real estate to eliminate the cost.
I believe that retailers should turn their store real estate into an advantage by extending omni channel support capabilities throughout the stores. This requires a couple of key modifications to the store plan:
- Increase the storage area to allow more product to be stored to support both direct sale in the store and fulfillment of eCommerce orders from the store.
- Diversify and even increase the number of people working in the store to support the addition of eCommerce fulfillment activities.
Retailers must increase their effectiveness in eCommerce delivery from any outlet to any location in order to survive in the future. Converting floor sales space to storage space will increase the abilities to more efficiently support both the direct purchase by consumers in the store and the eCommerce fulfillment. This change also requires an increase to the number of employees to support in order to support increased pressure on speed of delivery to the eCommerce channel.
The large legacy retailers have a huge advantage from their real estate locations strategically placed close to the consumer. Retailers can take advantage of this by turning their stores into a combination of direct to consumer distribution centers and store outlets. Retailers already have a partnership with parcel delivery carriers like UPS and FedEx to support the delivery of stock replenishment to the stores and it would be not problem to add the pickup from stores for consumer delivery In addition, this strategy would reduce the cost of divesting the real estate and instead turn the cost into an improvement in operations and consumer sales support.
And now for the audience participation portion of the show…
ECommerce will have wide ranging impacts on both the retail and manufacturing sectors. How can you focus these abilities to improve the consumer's experience? Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes. In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas. How can you support these continuously changing requirements?