You can no-longer make a distinction between online retail sales and bricks and mortar sales – says John Lewis Supply Chain Head
Chris Saynor, CEO of eyefortransport attended a recent omni-channel retail event in London organized by Descartes, Dinos Rocos from John Lewis gave an interesting insight into how John Lewis is maximising business from the ferocious growth of omni-channel retailing.
John Lewis is a 140+ year old British retail group with £9.5 billion in revenues. Dinos Rocos is the man responsible for John Lewis’ supply chain, a 38 year company veteran and current Operations Director who also sits on the management board. Dinos will also be keynoting the upcoming 3PL Summit and CSCO Forum in Amsterdam on November 13-14.
Dinos began his presentation with some interesting statistics to share. John Lewis is forecast to have £1 billion in online sales this year, and has a strategic plan to increase this to £2.4 billion by 2020.
29% of John Lewis customers research in the store, and then buy online. 63% research online and buy in store and 19% use a mobile device to research before they purchase. The key take-away is that now there is no distinction between store and online. They are completely integrated. Multi-channel is dead, long live omni-channel! Indeed John Lewis sees the need to increase their number of physical stores because of online pressure – there is an intrinsic need for a physical presence, an actual customer touch-point.
The question this obviously leads to is - what does this mean for pure-play online retailers such as Amazon and eBay?
eBay is undertaking a trial with the physical catalogue retailer Argos in the UK, which will be very interesting to watch, it is more of a ‘delivery-led’ click-and-collect solution at the moment. Although from a completely personal opinion, ‘wouldn’t Argos with it’s over 700 physical stores be a great purchase for Amazon?’
But back to John Lewis, who will undertake 200,000 deliveries a day from now until Christmas. They see supply chain costs as a % of sales rising due to factors such as fuel price increases, plus giving customers an increased level of delivery service – is this just the natural price to pay for a truly omni-channel product?
One interesting nugget of information that Dinos highlighted was about RFID. This technology is now commercially worthwhile if it is to be used to enable fulfilment from both shelf and store to online orders. The cost point now works if used in this way. Store stock and on-shelf product are increasingly being used as inventory warehouses for online sales.
One area though where John Lewis is seeing issues is in the increased volumes of ‘returns’. It seems as though no retailer has the silver bullet in terms of an answer to this conundrum, but at John Lewis they are going to ‘completely unpack the returns process’ and make it efficient as possible. Indeed, it could be said that the returns process offers retailers their best chance of gaining customer loyalty, if handled well.
I’m going to conclude my musings by highlighting an interesting concept that Robert Gregory from the consultant Planet Retail brought to our attention. To me this really shows how dynamic and inventive retailers may have to become to truly succeed in providing an efficient and cost effective omni-channel delivery. He talked about the potential for ‘delivery by crowd-sourcing’ – how customers could get a discount on their weekly shop for example if they delivered shopping to other customer’s homes that live near them. It may sound far-fetched, but I can just see this actually working.