Following many years of emphasizing cost reduction, retailers are combing back to a balanced outlook that puts equal weight on cost control and customer service. Retailers are also working hard to handle the high growth and strong demands of multichannel, direct-to-consumer commerce.
A little less than 40 percent of retail supply chain managers surveyed for The State of the Retail Supply Chain Report said they would pursue a balanced cost and service strategy for their organizations. This is a big change from the approach taken during the economic recession, when most managers focused on cost. For this survey, only 12 percent said their strategic priority would focus on cost control. Another 32 percent said their strategy would support store revenue growth, and 17 percent said improving store-level customer service would be a priority. Sponsored by the consulting firm Accenture, the study is conducted by the Retail Industry Leaders Association (RILA) and Auburn University College of Business.
The report focused to a great degree on the impact of e-commerce and multi-channel direct-to-consumer sales on retail supply chains. More than 85 percent of those surveyed said direct-to-consumer fulfillment would command more of their attention. And as demand changes from in-store purchases to online shopping and via mobile devices, multichannel fulfillment has grown as a critical success factor for retailers' success. In fact, 68 percent said they had multichannel operations already in place.
Order fulfillment and quality customer service in a multichannel scenario is highly complex. Retailers ideally fill orders for purchased made in-store, online, and from mobile devices from a common inventory pool. Successful retailers are overcoming the challenges involved with multichannel fulfillment, such as variations in shipment size, order filling processes, and delivery methods, as well as differences among sales channels in the stock-keeping unit (SKU) assortment.