Retailers must reinvent their store channel to support both eCommerce fulfillment and consumer shopping and purchasing, turning the store into a multi-purpose consumer fulfillment center.  This change allows the large retailers to take advantage of their large store network real estate and reduce the loss of liquidating the store real estate due to decreases in store retail sales.  This requires a dramatic change in operations of the store to consolidate the floor space with less inventory available on the floor and also an increase in focus on inventory management, location and fulfillment across channels.   The benefits of this change in strategy and operations though is an increase in inventory utilization, and reduction in overstock and also elimination of the loss resulting from store closures.

 

Amazon has started to evaluate repurposing malls into large distribution centers to support their growing demands and the large legacy retailers must view their real estate holdings from a different perspective to repurpose and eliminate the loss resulting from closing.  This strategy will allow the retailer to expand and improve their delivery capabilities by providing one day delivery capabilities at the standard rate across an extremely wide range of populations centers.  This improves service levels and reduces delivery costs at the same time. 

 

The repurposing of the stores requires an increased focus on the inventory control and management within the store and across the network to move inventory to the geographic location that has the greatest needs.  This requires improvements in the inventory control practices within the store and also across the network.  This change in strategy effective requires the store sales space to be treated as a type of pickable location where the inventory can be consumed by the consumer or the store operations to fill a shipment to another store or direct to the consumer.  This can be accomplished by reducing the quantity of merchandise displayed on the store and increasing the display space replenishment cycles.  Another benefit to this strategy is a decrease in out of stock conditions and also a decrease in the out of stock time.  Increased accuracy in inventory will allow the store to identify the potential display out of stock condition while the increase in inventory storage allows a greater quantity of inventory to replenish the display.  Another important aspect is the improved store distribution network allows stores to be replenished by nearby stores in a quicker cycle.

 

Retailers need to view their store sales challenges through a different perspective in order address the challenges.  This current disruption in the retail brick and mortar store operation can provide large legacy retailers with a supply chain advantage over online competitors by changing the paradigm of their shopping and delivery model.  Retailers have essentially been fighting the shopping and delivery changes demanded by consumers because of their perceived increase in costs.  Taking the entire extended supply chain into consideration shows that a strategic change in shopping and delivery support will increase the retailer’s capability while controlling costs.

 

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?