Multi-channel retailing is now a reality, but while retailers have worked hard to deliver a consistent customer experience, most have yet to achieve an integrated multi-channel strategy across the business.
It is of course essential that the quality of the in-store experience is replicated online with a well designed website and backed up with an attractive catalogue; but today, multi-channel retailing is as much about ‘back-end’ integration of sales channels at the level of supply chain, stock management and fulfilment, explains Sam Jackson, Chief Executive, Prologic.
Customer experience
Multi-channel retailing is without doubt a primary goal for many organisations. However, a large proportion of retailers are experiencing significant problems in the effective management and allocation of stock across channels.
As every retailer will attest, the single most important factor in determining whether or not customers will return to their eCommerce site or mail order services is the experience of stock availability and fulfilment.
If retailers are to improve stock availability across every channel, they need to take a radical look at existing supply chain and warehouse processes. Currently, most retailers allocate stock to an eCommerce or mail order channel as if it were another shop: the stock is either available in that "shop" or it isn’t. This approach is simply not sophisticated enough to maximise either profitable sales or the customer experience.
Disparate model
Today, most retailers are ring-fencing stock by channel, yet this is counter-productive: goods that could have been sold through one channel end up being marked down in another, whilst sales opportunities in one channel are lost despite stock availability elsewhere in the business.
The result of this siloed approach is that the retailer is effectively running several separate businesses and losing the economies of scale and flexibility that multi-channel retailing can bring. The purchasing process is inherently inefficient as buyers focus on individual channels rather than the collective business needs, while the warehouse has to pick for each channel separately, adding cost and complexity to the supply chain process.
If retailers are to realise the full benefits of multi-channel retailing, then there is a clear need to implement an integrated channel approach to the supply chain that maximises full ticket price sales across all channels. This requires a major step change for the majority of retailers, as to date very few have achieved integrated supply chain processes.
Integrated approach
An integrated channel approach that delivers a consolidated view of stock across every channel of the business can transform operational performance: warehousing staff can pick for multiple channels simultaneously, significantly reducing costs and improving efficiency. Similarly, with aggregated information across every channel, merchandising staff can make better decisions and gain efficiency benefits from consolidated purchasing and by maximising the use of each product consignment.
Key to streamlining supply chain processes and driving up the customer experience is the use of real-time, automated decision-making. For example, if stock is unavailable in the eCommerce channel, the retailer can set rules that check stock levels in alternative channels and re-allocate in real-time to fulfil immediate customer demand.
These rules can be set at many levels, not just stock keeping unit (SKU), enabling retailers to add real flexibility to stock management and fulfilment processes. Retailers can then match rules to business objectives, for example prioritising orders placed over the telephone or via the website since they are guaranteed full price sales.
Replacing current inefficiencies that are adding cost and reducing productivity with an integrated multi-channel supply chain can deliver optimum sales and profits. Furthermore it allows supply chain experts to focus their efforts on planning, supplier performance, shipping and fulfilment rather than constantly trying to manually juggle the diverse and competing stock requirements of each sales channel.
Business flexibility
In the past the own-store channel might have represented more than 90% of sales, but as retailers increasingly plan to boost the proportion of revenue from home shopping and wholesale channels, it is becoming critical to improve and integrate stock and supply chain management across the entire business. This is more complex than the old single retail channel model, but it brings huge benefits in terms of flexibility, increased margins and improved customer experience.
With an integrated channel retail solution that delivers an aggregated and flexible view of stock across every channel, retailers can ensure stock is allocated across channels to maximise sales and minimise end-of-seasonal mark down. Furthermore, retailers can confidently embark on new business initiatives – adding a franchise channel or concessions for example – without compromising stock utilisation across existing channels.