Retailing has always been a dynamic industry but with customers demanding ever more rapid retail there will be plenty of supply chain challenges in 2012.
Talk of speeding up the retail supply chain a few years back and the conversation would generally cover such developments as floor-ready merchandise, roll cages, just-in-time manufacturing, build to order, or the need for 24×7 deliveries. As we have moved from a product-led market to one dominated by consumer demand – from push to pull – the supply chain priorities have changed too.
At the heart of today’s “rapid retailing” models is the premise that customers are becoming less patient, less tolerant and ever more demanding. They expect instant satisfaction, immediate access to information, and a high degree of personalisation. A few minutes reflection on our own shopping behaviour will probably confirm some aspects, at least, of such theories. (When did you last complain about the length of a queue or the time the call centre took to sort out your WIsMO – where is my order – query?)
Stock availability is, of course, near the top of any consumer wish list, and that is as true in-store as it is online with stock-outs leading to abandoned baskets and irritation in both channels. It’s also been a priority for most retailers for years, with varied degrees of success.
Marks & Spencer’s RFID projects were driven by a need to improve stock accuracy and availability; Entertainment UK (before its parent, Woolworths, fell victim to the downturn) broke new ground with a system that could accurately predict within hours of a new DVD going on sale what the sales were likely to be; fashion chains like Zara can take new styles from design to delivery in weeks; while the major supermarkets have long been combining sales predictions and till throughput to keep the shelves filled.
Online “searchandising” tools often ensure that out of stock lines are carefully omitted from the merchandise options while multi-channel experts regularly argue the case for real-time inventory records.
While shoppers want instant satisfaction they are also increasingly cross-channel in their habits – behavioural changes that some retailers are already starting to exploit. Fashion chains, such as Next and Aurora (whose brands include Coast and Oasis), will pull in stock from a neighbouring branch within hours if a shopper’s chosen size or colour is not currently available in store.
Real-time stock systems and staff equipped with iPads (currently on trial with Aurora) mean that staff can quickly locate product and arrange inter-branch transfers or trigger a home delivery order to give that instant satisfaction.
Such developments are, however, just the start. Tony Bryant, head of business development at retail technology vendor K3, for example, argues that eventually “every store should be a flagship store” offering a full product range and instant availability by combining virtual stock models with in-store web access to show customers what is available in bigger branches and track down products for immediate dispatch. And receiving goods in two or three days will no longer be good enough. Consumers will, say some futurists, expect their choices to be delivered within hours of returning home from their shopping trip.
Customers don’t just want stock availability they also want information about product specifications, ethical sourcing, price or whatever and they don’t want to scour the sale floor for a shop assistant to answer their queries. Enter mobile apps, QR codes and in-store WiFi with customers able to interrogate retail databases via their own smart phones or via in-store tablet computers to deliver this instant information.
There are more supply chain challenges here, too. Standards bodies have been trying for decades to drive global data synchronisation and in some sectors have been reasonably successful, but creating a universal product specification that can be accessed not just by trading partners throughout the supply chain, but ultimately by a shopper scanning a QR code on an advertising hoarding or via WiFi on the shop floor is probably still some way off. Yet, if the analysts are to be believed, customers are becoming more concerned about ethical sourcing, so do want to know on which farm that beef joint was raised or to be reassured that those jeans were not made from cotton picked by child labourers in Uzbekistan.
Add to the demands for instant satisfaction and instant information, a desire for personalisation and supply chains are faced with yet more complexity. Forecasters have been predicting a move to personalised products for years – personalised medication based on genetic code, personalised car finishes, made to measure clothes, or even build-your-own pizzas. Many such schemes ended in failure, but times and technologies change and personalised products and recommendations are now expected. Add the personal information posted on social media sites to customer relationship management systems, as retailers are already doing, and the result is better lifestyle insights into the sort of products a particular customer may want to buy.
With no-one predicting an upturn in the economy any time soon, those retailers that do manage to persuade shoppers to part with their cash will need to meet some, at least, of their demanding expectations – and that means not just competitive prices but high stock availability, easily accessed information and personalised offers. And in the world of rapid retailing, it also means never keeping that customer waiting.
Regular columnist Penelope Ody is a retail market specialist.