The New Retail Industry

This week kicks off the “official” holiday shopping period here in the US and how traditional retailers versus online retailers fare will be closely monitored. However, an interesting comment from one analyst, Laura Kennedy, director of retail insight at Kantar Retail, noted, “Retailers have finally realized that shoppers don’t see the difference between going to the store and shopping online.”

Indeed, e-commerce is simply a part of doing business and should no longer be considered a separate component among companies.

But, it’s getting to that seamless interaction between online and physical that seems to have perplexed many companies. Not only that, Amazon has altered the retail industry in such a way that even one of the largest of retailers, Wal-Mart, is having to play catch-up. Despite heavy investments, Wal-Mart still reported only a 10% increase in global e-commerce sales for the third quarter compared to more than double that for Amazon for the same period.

Still, in many ways it really is all about Amazon. Amazon has redefined the retail industry by focusing on the supply chain, most notably fulfillment and delivery – getting the right goods in the hands of the consumer efficiently and quicker. It has not only put other retailers on notice but also logistics companies.

But don’t count out other retailers though. The physical store still remains a focal point and as observed in November, Amazon opened a physical bookstore. Whether or not Amazon expands upon its physical store concept is perhaps too early to determine but, the importance of the physical store is evident and in fact, according to some surveys, three-fourths of Millennials plan to shop in stores during Black Friday weekend, but with a twist…armed with a mobile phone, the Millennial may compare prices, check availability at other locations, order online or purchase in the store.

While Amazon ushered in the importance of online ordering and the logistics behind it, retailers with store-fronts such as Walmart, Target and Macy’s have taken this important concept further by creating a retail strategy that connects e-commerce to its physical stores. This omnichannel approach is the new retail industry and getting the right formula in place is what will win the consumer who has more choices today versus just 5 years ago – online, in-store, mobile and new store concepts.

The supply chain of the new retail industry is unique and involves many components – e-commerce, m-commerce, technologies and traditional and other alternative approaches. While retailers with store fronts are more prevalent in such locations as the US, Canada and Western Europe, other markets in Asia, Africa and Latin America differ and in many cases the opposite is true – the lack of store-fronts. Still, these regions are also undergoing a redefinition of the retail industry.

In the coming weeks, this new retail industry will be analyzed further in various articles that will highlight such topics as returns, delivery options, fulfillment changes, emerging markets and specific retailers. Later in 2016, Logistics Trends & Insights’ will bring this analysis together into its Retail Logistics report.

Cathy Morrow Roberson

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