(708) 946-9792 Inquire

Retail Logistics Copes With Change

“Retailers can be assigned to one of three categories: Healthy, lifestyle changes required, or intensive care needed. Unfortunately, there is a fourth category in 2017 – Dead on Arrival – with several formerly robust patients on the way to the morgue.”

That’s the beginning of the seventh annual State of the Retail Supply Chain report issued by Auburn University’s Center for Supply Chain Innovation and the Retail Industry Leaders Association.

“Adapting to the hypercompetitive landscape requires supply chain capabilities that attract customers and grow the business,” says Brian Gibson, executive director of Auburn University center.

“Supply chain executives must integrate operations across multiple channels, use analytics to drive supply chain decisions, and monetize supply chain capabilities.”

We’re not talking about small retail businesses. The researchers targeted organizations with annual revenues above $1 billion that already possess omnichannel capabilities and broad geographic activity. Companies participating include such retail powerhouses as Walmart, Target, Costco, Lowes, Home Depot, Kohl’s, Dollar General, Bass Pro Shops, CVS Health, AutoZone, REI, Tiffany & Co., Big Lots, Best Buy and Walgreens.

Interestingly, also participating were companies that are struggling to survive in the new environment, such as Neiman Marcus, JC Penney, Dillard’s, Payless Shoe Source and Abercrombie & Fitch.

Interviews and surveys were conducted with top retail supply chain executives, combined with in-depth research and analysis. This led to identification of three top supply chain capabilities stemming from digital transformation of the industry being driven by the evolving consumer.

These are: enhancing order fulfillment capabilities, incorporating extensive use of stores for fulfilment, and implementing end-toend supply chain planning.

“As retailers focus on innovation and moving their supply chains into the future, this report provides the insight and tools to help prioritize investment and increase marketplace competition,” says Lisa LaBruno, Senior Vice President of Retail Operations for RILA.

Seeking Survival Strategies

“There is no magic pill to cure the ails of struggling retailers,” the report concludes. “When it comes to battling the Amazon syndrome and other health issues, retailers must deploy integration, analytics, and a holistic monetization strategy.”

Bigger retailers are committed to supply chain change – even without any assurance it will work.

“The retail supply chain executives we spoke with expressed a variety of plans,” the researchers note “The big question is: can they bring their plans to fruition quickly enough to ensure strong health going forward?”

One interviewed executive concludes, “We need to leverage our unique strengths, make sure that we’re leveraging the brick-and-mortar and digital together, and do so in a way that targets our highvalue customers.”

The Auburn researchers agree. “In our opinion, that’s a perfectly customized prescription for success.” Inventory, fulfillment centers and strategies can no longer be channel-specific.”

While pursuing an omnichannel strategy makes perfect sense, “retailers must remember that customers don’t care about channels or supply chains,” the researchers point out.

“They just want choice, effective solutions and positive experiences. It is up to the supply chain executives to figure out how best to integrate their operations so that channels are transparent to customers and service is spot-on.”

Analytics are beginning to play a critical role in serving those customers with accuracy, timeliness, and consistency at a reasonable cost, the researchers find, noting that logistics leaders are putting more emphasis on forward looking tools to help diagnose problems, predict demand and prescribe action.

“As those internal analytical skills become more robust, retailers will be able to use their vast cache of POS data and customer loyalty information for more effective supply chain planning and decision making,” they say.

Supply chain decisions must support of the economic vitality of the organization, they stress.

“Retailers cannot survive by cutting costs. Monetization of the supply chain and fulfillment operations also means focusing on revenue generation through strategic investment in differentiating capabilities.”

The report concludes, “That differentiation is the key to customer retention and profit growth.”

Leave a Reply

Your email address will not be published. Required fields are marked *