Today’s retailing is about getting the right products to the right place at the right time.
It is only by getting the fundamentals of stock accuracy and visibility right that retailers will succeed in delivering the seamless ‘omni-channel’ shopping experience that customers now expect.
Achieving this may require a back to basics approach, with an increased focus on in-store stock management to avoid problems occurring due to poor visibility of stock in the ‘hidden zone’, which begins when it first arrives at a store. ‘Hidden zone’ issues typically arise due to a visibility gap when little or no proactive stock management takes place between the time stock leaves the warehouse, its arrival in store, and the time it spends in-store prior to a sale. Managing this period is highly relevant to the success of omni-channel, especially at a time when retailers are trying to introduce services like Click and Collect.
What issues does the ‘hidden zone’ create?
From experience, the longer stock is left unmanaged after its arrival in-store, the more likely that inaccuracies will be introduced into the supply chain. And the effect of poor ‘hidden zone’ management is often lost sales - so how do these issues arise and what can be done to resolve them?
Issue 1: Products not on shelves when customers are looking to buy
Each year retailers lose billions of pounds worth of sales because of poor stock management. Common factors for these ‘out of stocks’ occurring are due to replenishment ordering errors or simple under anticipated demand. Another reason, which can be avoided entirely, stems from poor shelf replenishment processes and low stock visibility in the store. Retailers can eliminate hidden zone-related ‘out of stocks’ by managing stock availability and visibility using a single identifier from the moment items arrive in store and are not yet visible on central inventory systems.
Issue 2: Inconsistent and uncompetitive pricing across channels
With 40% of shoppers admitting they use a mobile device when inside a store, it is unsurprising that ‘showrooming’ has become so widespread. It is forcing retailers to stretch their pricing capabilities and respond with immediate price cuts visible in the store and online to match competitor deals, and one off ‘flash sales’ or manager’s specials. Using an in-store management solution with a mobile device offers the chance to act spontaneously to respond to a competitive pricing situation whilst maintaining a connection with the customer in-store.
Issue 3: Click and Collect service does not meet customer expectations
As one of the fastest growing ways for consumers to purchase goods, Click and Collect resolves the age-old problem of last mile delivery. However, for as many problems as it solves, Click and Collect also opens up new challenges as retailers need to identify ways to fulfil orders either using store based inventory, or from a central warehouse. For example, when introducing Click and Collect services, it is essential to have reliable inventory checking services to ensure that if a customer is given information that an item is available for home delivery, or could be purchased for collection at a different branch, it is accurate. Equally, if a logistics error caused a Click and Collect order to be delivered elsewhere and a replacement needs allocating from the shop floor, this item needs to be booked out as sold.
Can Click and Collect ‘save the sale’?
When armed with the right technology, Click and Collect services can provide a means to ‘save the sale’ by offering consumers a chance to order from another branch and either arrange to collect the items or have them delivered. Fulfilling this requires in-store stock visibility capabilities to check with real time accuracy exactly what stock is available to purchase and where, with the means of taking a payment there and then. Such an investment would pay dividends, as research has shown 42% of shoppers would purchase an out of stock product from the retailer if a shop assistant was able to check nearby stores for availability and 44% said they would still purchase if offered the option to buy the item online and have it delivered.
Being successful at omni-channel retailing, and in particular Click and Collect, requires 100% stock accuracy and careful management of the ‘hidden zone’. Retailers need to have immediate visibility of the stock available in their local area at all times and this data needs to be accurate enough to win both the sale and continued support of the customer. Depending on the fulfilment model, stores either need the processes and technical capability to act as mini-warehouses, or the flexibility to handle both traditional sales and ‘pick to collect’ orders.
Get these things right, and retailers can have a very powerful omni-channel offering, that will enable their brand to deliver a compelling physical experience in the store and satisfy demand for immediacy and price, potentially competing head on with pure e-commerce specialists. Successfully merging the two is the essence of omni-channel and will ultimately win the loyalty of shoppers.
European logistics leader Norbert Dentressangle joins the 2015 3PL Summit and the North American market place.
The 2015 Chief Supply Chain Officer Strategy Report explores the next generation of supply chain management, taking the responses of global senior supply chain executives to form a benchmark for future strategy.
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