Meeting consumer needs in today's retail environment is becoming increasingly challenging, especially for organizations rooted in brick-and-mortar operations. As they struggle to address changing consumer shopping preferences—driven in large part by the "Amazon effect"—many are finding that they must rethink in-store operations in order to provide a seamless experience for shoppers, whether those shoppers choose to buy online, shop in the store, or some combination of the two.
"There is this expectation for immediate gratification, and Amazon is pioneering ways to deliver it. Meanwhile, retailers are re-evaluating how they can respond to this need as well," says Karen Bomber, director of retail industry marketing for Fort Mill, S.C.-based Honeywell Safety and Productivity Solutions, which provides hardware and software solutions for retailers. "Consumers don't care if they got the product online [or] at a store; they just want a single, unified shopping experience. Retailers are trying to manage through this expectation."
One of the biggest challenges retailers must manage is the changing work requirements of in-store associates. No longer there solely to meet the needs of traditional walk-in traffic, associates must now accommodate online shoppers who are picking up or returning items in the store as well as prepare ship-from-store e-commerce orders—entirely different tasks than they've had to perform in the past. Supply chain service providers say such changes are reshaping the retail store from a people, process, and technology point of view, with an emphasis on the latter aspect.
"Technology is a huge piece of this," Bomber says, emphasizing the need to prepare in-store associates to meet changing demands. "It comes down to empowering the associate and putting technology into the associate's hands."
START WITH A PLAN
There are some prerequisites when it comes to improving the retail fulfillment process, and most have to do with inventory planning and management. Rod Daugherty, vice president of product strategy for Atlanta-based cloud supply chain planning solutions provider Blue Ridge Global, explains that companies must first have a good e-commerce platform in place, along with solid strategies for planning and managing their inventory investment across all channels. This means that their e-commerce channel doesn't operate in a vacuum and that they have or are working toward a single, unified view of inventory that allows them to position products where they are most likely to be needed. The latter requires optimizing in-store inventory for both "click and collect" (in which buyers purchase products online and pick them up in the retail store) and ship-from-store fulfillment. A single view of inventory also helps promote accuracy, which is key to improving fulfillment and providing the best possible customer service, Daugherty and others agree.
"As obvious as this may sound, the first thing retailers must have is inventory accuracy at the store level. If you don't know how much you have on hand ... then your B2C [business-to-consumer] e-commerce fulfillment from the store isn't going to work," Daugherty explains. "I know that sounds terribly obvious, but I still run into retail companies in some verticals that aren't very good at that.
"I would say that's the first thing," Daugherty adds. "That's table stakes."
ADD TECHNOLOGY, SERVICES
Technology is the next piece of the puzzle, and it can be used to create operational efficiencies as well as improve customer-engaging activities. Bomber points to handheld mobile devices, which are increasingly finding their way into the store, as one example. Such devices put information at an associate's fingertips, allowing them to move through the store with an automated system for filling orders. The devices can include scanners, RFID (radio-frequency identification) readers, printers, and rugged mobile handheld computers designed to fit a wide variety of retail environments. Honeywell offers a "connected retail" solution that combines a handheld computer with voice-directed technology (in the form of a wireless headset) and software that connects to a retailer's inventory management system for this very purpose. Such systems also allow in-store associates to receive information and react in real time, improving the replenishment process as well.
In a similar way, mobile technologies are being used for point-of-sale (POS) transactions, helping improve the in-store experience for both online and in-store shoppers, Bomber adds. Although most retail stores still use traditional point-of-sale terminals, many are beginning to complement that approach with mobile POS technology to speed up the checkout process for both click-and-collect and walk-in traffic. Mobile POS technology includes handheld tablets and smaller devices used for payment—think of the last time you purchased something at an Apple store—as well as more rugged industrial handheld devices you may see in a big box retail outlet.
Although convenience and efficiency are driving many of these changes, experts also point to underlying demand for faster delivery service as a key component of the evolving retail store. Waiting for home delivery can take too long for some customers, who will prefer more immediate click-and-collect options, for instance. There is also growing demand for "access point" pickup, according to Louis DeJianne, director of retail marketing for Atlanta-based global transportation and logistics giant UPS. Through UPS's Access Point Network, customers can buy online and pick up at a conveniently located access point when home delivery won't work or there is no retail outlet nearby (provided the retailer has included UPS Access Point locations in its shipping options). UPS's network includes nearly 9,000 locations in the U.S. and more than 27,000 globally for both business and consumer use—the latter driven by changing consumer purchasing habits. Access points include independently owned and operated neighborhood businesses, UPS Store locations, and self-service lockers.
"What we're seeing is retailers looking for any number of opportunities to improve the customer experience and shorten the time period between time of purchase online and the consumer receiving it," says DeJianne, emphasizing the need for a customized approach to adapting retail fulfillment services. "Every retailer has to look at what it needs to accomplish in terms of that customer experience and then design [its processes] according to those needs."
FOCUS ON TRAINING
Bomber, Daugherty, and DeJianne agree that employee training is a crucial part of the mix no matter what approach retailers take to respond to changing fulfillment demands. Training employees on how to use new technology is one thing, but they also need to learn how to perform distribution center-like functions if they are to successfully integrate the online and physical store experience, Daugherty says. Store associates must learn how to pick, stage, and ship orders as well as gain an understanding of the logistics process. This becomes increasingly challenging in an environment staffed by part-time workers and temporary or seasonal help.
"That's a big challenge that retailers face," he says, adding that they must "put discipline into the training process and into filling those e-commerce orders."
DeJianne agrees, emphasizing the need for a more disciplined approach to hiring as well. This becomes especially important in a strong economy, as business picks up across many industries, as well as when staffing to meet seasonal demand. He says he is already seeing retailers invest in this aspect of their business today.
"Retailers are starting to hire people much earlier in the process and bring them on board so that they are comfortable," he says. "[Increased] volume and growth requires retailers to ramp up their personnel and ensure new technology works properly. Staffing has become a very important piece of the brick-and-mortar retailer's day."
Gartner, Inc.