Despite Britain’s 24 million online shoppers spending record amounts on goods in the run-up to Christmas, it seems a significant number of retailers endured a difficult festive season. Increased internet shopping had a negative impact on high street footfall; retailers that have not yet embraced sales channels such as the internet saw the worst like-for-like sales in several years. The rise in online spending, up 40 per cent or more, marks a shift in the way people shop.
With consumers now buying through mail order, call centres, the web, TV and high street stores, retailers must give customers the same service level wherever they choose to shop. Many back-end systems are ill-equipped to service the multi-channel consumer, a failure which will be increasingly costly to retailers as the multi-channel evolution gathers pace. Getting it right in the run-up to next Christmas, during which some stores make up to 60 per cent of their annual sales, will be a matter of survival for some.
Manhattan Associates, a leading supplier of supply chain execution systems in the retail market, says there are five lessons to be learnt from Christmas past which should help retailers avoid problems next time around.
Visibility – It can be hard to manage and consolidate stock across the web, catalogues, shops and TV channel sales. Recognising recurring seasonal buying patterns and distinguishing between fast and slow moving items are first steps in the right direction.
Productivity – Inventory planning through complex spreadsheets is labour-intensive and drives down productivity. Warehouses are not always laid out for the fast picking models of e-commerce and catalogues, making processes inefficient and expensive.
Customer service – The busy December period predictably led to order backlog, delays and cancellations. Separating picking from packing can provide added value by freeing up staff to offer wrapped or personalised presents for web shoppers. It is also important to provide frequent updates on the status of orders as slow and complex processes harm relationships with customers.
Profit erosion – Overstocking is a commonly used method for handling demand surges. However, the surges are often followed by heavy discounting to shift excess stock and high storage costs of old inventory. Efforts must be made to identify the fastest and most cost-efficient delivery methods.
Management – Warehouses can become too full and function badly because of this. Systems to deal with the storage and picking of additional Christmas stock are essential.