Large legacy retailers are with the disruption to both their multi channel sales strategies and their supply chain support strategies caused by the omni channel capabilities developed by consumers. While these large retailers were focused on implementing multi channel purchasing capabilities consumers leapt ahead and developed omni channel shopping and purchasing capabilities that left these retailers struggling to recover. These retailers were working under the assumption that they could control the shopping and purchasing by channel because they have always been in control of the options. Then the wireless network capabilities improved dramatically which then allowed consumers to develop their own shopping and purchasing practices in a true omni channel capabilities to completely push aside retailer controls.
This consumer paradigm shift has left these retailers in the lurch with a large network of stores and distribution centers that are tuned for specific capabilities while the consumer demands have shifted. Add to this the consumer expectation of two day delivery resulting from the Amazon Prime program and the result is a supply chain strained to the limits to meet the demands. This is creating a disruption in the supply chain in demands to meet new direct to consumer shipping along with changes to the store replenishment shipping requirements. At this point retailers are struggling to adjust to reduction in store sales and increases in direct to consumer shipments causing a major disruption in their forecast and replenishment planning along is the transportation model.
Retailers are struggling to support consumer shopping and purchasing demands that have a large impact on their supply chain and especially their transportation and delivery network. Retailers still seem to be working in a supply and demand model that is heavily slanted towards the retail store purchasing and now consumers are shifting to eCommerce purchasing. This shift is disrupting the existing retail model and retailers must as a result change their retail store model to create a network of small local distribution centers that also house a showroom with retail sales to the consumer as well. This model addresses the consumer demands in a manner that addresses the supply chain and especially the transportation disruption caused by the change in consumer shopping and purchasing.
This model supports 1 - 2 day delivery across the retailer’s network through standard parcel delivery rates as a result of changing the retail store utilization. Retailers will have the ability to ship parcels from their stores via parcel using zone one parcel delivery rates to efficiently delivery at a reasonable rate. I believe this model can be turned into a category killer for retailers. I further believe that Amazon realizes this and that is one reason for their expansion into the retail store market.
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?