FEATURE
WHAT HAS CHANGED IN OMNICHANNEL RETAIL ?
IN 2020 : EVERYTHING . By : Checkpoint Systems White Paper
Almost overnight , we ’ ve seen a great digital shift in the retail industry . From changing people ’ s buying habits to transforming the way retailers engage with , and support their customers . The pace of change in 2020 has seen retailers rapidly scale their digital operations , expand delivery capabilities , enter new markets and in some cases introduce new e-commerce opportunities entirely . These changes , coupled with new consumer behaviors , will leave a lasting change on the industry .
The combination of brick-and-mortar with digital shopping – omnichannel – was already accelerating but the pandemic has dramatically accelerated the growth of e-commerce sales . According to McKinsey , online sales had increased by 14 % CAGR over the past four years . In the midst of the crisis , online purchasing grew 25 % in a two-week period in March .
With online expected to be the fastest-growing channel in 2021 , retailers are under greater pressure to scale up their omnichannel offering . As a result , stores are fast becoming mini-fulfilment centres as retailers seek to ensure order fulfilment . Additionally , the events of 2020 have brought “ buy online and pick up in-store ” ( BOPIS ) to the fore with retailers finding new ways to keep their customers safe and their loyalty strong by allowing customers to collect orders from the curbside .
US retailer Dick ’ s launched curbside pickup early in the pandemic and said 75 % of its online orders in Q2 were fulfilled by stores – either shipped to the customer from their nearest store or picked up curbside . Even after lockdowns ended and stores began reopening , curbside collections kept growing . “ We anticipated originally that we would see a large drop-off when the stores reopened , but that is not the case ” Dick ’ s president Lauren Hobart noted on the company ’ s Q2 earnings call .
Walmart CEO Doug McMillion expressed similar conviction on Walmart ’ s Q3 earnings call : “ Our e-commerce and omnichannel penetration continue to rise , accelerating trends by two to three years in some cases . We ' re convinced that most of the behavior change will persist beyond the pandemic .”
With such a rapid pace of change , retailers with strong omnichannel services like BOPIS and ship-from-store , are not only surviving but may see an uptick in customer spend . Michelle Gass , CEO of Kohl ’ s , revealed : “ Our omnichannel customers spend six times more than our digital-only customers and four times more than our store-only customers ”.
Omnichannel comes with challenges
As retailers focus on upscaling their e-commerce capabilities , the importance of inventory accuracy is critical . Poor inventory accuracy can lead to lost sales through order cancellations and poor experience . The same poor inventory accuracy can force retailers to carry excess stock just to avoid order cancellations , but leads to lost revenue when the excess stock needs to be marked down .
The RFID revolution
For many years , retailers have deployed RFID solutions to solve omnichannel challenges with great success , achieving much-improved inventory accuracy and avoiding costly out of stock scenarios . A recent statement by Nike CFO Matt Fried said : “ RFID … is a critical enabler in order for us to create a fully connected marketplace for Nike products across both our own stores and our strategic partners .”
Using RFID , retailers can know exactly how much merchandise it has left across its enterprise in each store and in distribution centres waiting to fulfil online orders . As a result , they can be extremely agile , by making decisive , information-driven decisions to re-order . They can respond to changing consumer demand extremely quickly by redistributing merchandise based on their sales data .
Adopting an omnichannel strategy
While many retailers have already begun adopting an omnichannel strategy , the introduction of social distancing has led to a sharp increase in e-commerce sales , forcing through the digital transformation . Unless companies scale up and strengthen their omnichannel capabilities in the recovery phase of the crisis , they will suffer in the longer term .
An agile supply chain , driven by RFID , is the key . In fact , with RFID , inventory accuracy can be elevated from 65-75 % to 93-99 %. It enables the most efficient and cost-effective way to deliver click and collect and online services through the utilisation of inventory in stores , not just in distribution centres .
By leveraging data , captured by our RFID solutions , retailers will be empowered to confidently promise customers fulfilment options including specific in-store order pick-up times or same-day delivery .
RFID is now firmly established as the enabling technology for apparel retailers to rapidly provide inventory visibility and to support effective reorganization of entire supply chains . Coupled with timely and accurate data to help retailers optimize in store order picking processes . For associates of stores that are fulfilling customer orders it is critical that they can find , pick and prepare orders with accuracy and efficiency so reducing operational costs whilst ensuring service level commitments .
Checkpoint Systems has been delivering retail solutions for over 50 years . To learn more contact @ checkpt . com
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