23 October 2019

VISIBILITY DRIVES EFFICIENCY IN THE RETAIL SECTOR, AND REFRAMING OMNICHANNEL



VISIBILITY

Nearly 7 years working in flagships for Abercrombie & Fitch taught me a lot about how (and how not) to run a successful retail business.

One of my biggest headaches was a lack of visibility around incoming shipments.  Abercrombie’s allocation teams could barely give more than 24 hours notice on what was arriving.

Sometimes stores would not find out what a shipment consisted of until it arrived.  When deliveries could be up to 15’000 units in a single night, in a stockroom that was typically overcapacity at all times, this presented us with several significant operational issues.  

Stores were often scrambling to find staff at the last minute, or finding themselves overstaffed, and unable to force people to leave work early (in the EU at least).

In addition to this, having insufficient time to make space for incoming items lead to a decrease in efficiency, as items needed to be staged before they could be put in the correct location.

Finally, they received little or no notice of shipments arriving early, or (as was more often the case) late, meaning that either the time of the drivers and assets were wasted, or the store’s merchandise systems teams were wasted.

Simply having visibility on your fleet is a key part of operational effectiveness within retail, whether you run a chain of flagship stores or a single room boutique.

 

REFRAMING OMNICHANNEL

There is much discussion about how to best execute on an omnichannel strategy.  I am going to sidestep the grander discussion to look at some of the components in isolation.

Omnichannel is typically spoken about in terms of putting the customer at the centre, and upgrading the customer experience, but it is important to look at how this benefits businesses.

The old brick and mortar retail model was single lane:  Buy in-store, return in-store. Then came telesales products, again with a single lane dynamic. 

Next came single brands offering a brick & mortar experience alongside an online shopping experience.  However, these (in the early days at least) typically remained siloed, with returns needing to go back to point of purchase, the on and offline stores were likely to have different look and feels, and often a quite different product offering.

These two sales channels stayed the only way to shop for a long time, but now things have changed drastically.

I believe it’s important to see the new delivery modes as new revenue streams.

Store-to-store: where merchandise is transferred between stores to compensate for lean inventory levels.  This way if a customer likes what they see in-store, but that store doesn’t hold any inventory, a rider can be dispatched to get the desired item to the store closest to the customer.

Buy in-store, deliver to home:  One version of this is much like the example above.  In the case where inventory is not on hand, the requires item/s can be delivered to the home of the customer from another store.

Another example of this is if the customer would like (for the sake of convenience) to have someone else deliver the items to their home (or anywhere else) arrangements can be made to have the required items delivered from any store or warehouse.

Buy online, collect in-store: Sometimes customers like to browse online but also like the reassurance (or speed) of being able to collect at a physical location.

These capabilities represent new services, and thus are capable of generating additional revenue for retailers.  The smart retailers are tracking these as individual verticles, each with their own KPIs and growth goals, looking to perfect each one individually in order to grow the business as a whole.

Needless to say, all this is virtually impossible without the right tech stack.

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