Guy Courtin, Vice President and Industry Principal, Retail, Tecsys
“We no longer go online, we live online,” says Steve Dennis in his latest book, Remarkable Retail. This reality has been amplified by the day-to-day impact Covid-19 has had on our society: our children moved to virtual classrooms, we turned to more telemedicine, first dates at local coffee shops became Zoom dates, and road warriors had to trade in their frequent flyer miles for non-stop video meetings. Meanwhile, we experienced empty shelves at the grocery store and some shopping channels with limited bandwidth were restricted to “essential goods”. Even now we are feeling the repercussions in the automotive industry – and others – struggling from the physical lack of components.
With recent strides in digital adoption and sustained bottlenecks in physical fulfilment, we can glean important lessons for the future-minded retailer. The digital and physical realms of retail will continue to intersect, and it will become increasingly essential to pursue a balanced strategy that embraces a digital mindset grounded in physical realities.
Yet the digital aspects of retail have commanded a lot more attention over the past decade or so. The surge in e-commerce, and more recently, social commerce, have placed a new breed of digital consumer in the driver’s seat, and those consumers have driven both interest and investment in the digital interface. As that side of the equation has grown, the physical side has been desperate to keep pace.
It is long overdue for retailers and brands to consider how their physical assets and efforts can keep up with their digital promises. The foremost strategies in this effort include:
Rethink how the store fits into the broader ecosystem
Stores are not dead, but their roles are adapting. Many successful use cases of this evolution involve providing more experience-based shopping: demos at Bass Pro Shops, for example, or the PGA Super Stores. Others involve culture-building efforts, such as Apple stores offering a host of classes. Stores are also becoming waypoints for flexible fulfilment options such as kerbside pickup or pickup in store – some are even taking returns from other vendors – Kohl’s, for example, is accepting Amazon returns. The common thread is that retailers are pushing the traditional limits of brick-and-mortar to create added-value experiences within their retail ecosystems, leveraging these key physical assets to address the ever-growing needs of the end customer.
The warehouse is no longer just for storage
The store is not the only physical location that is finding a new role in the ecosystem – the role of the warehouse is undergoing change as well. Jeremy Bodenhamer’s excellent book, Adapt or Die: Your Survival Guide to Modern Warehouse Automation, outlines the new responsibilities placed on the warehouse. The thesis is that if you sell a physical product, fulfilment will make or break you. This begs the question for retailers: how does your warehouse strategy support your physical fulfilment promises? Answering that question may lead to fine-tuning internal resources to improve the customer experience, leveraging third-party logistics partners to provide greater flexibility, or some combination thereof. This physical warehousing and management of goods can play a significant role when it comes to delighting the end customer, and how retailers and brands maximise this asset within the context of digital commerce is often used as a strategic advantage rather than simply a back-office operation.
Last-mile fulfilment is an important customer touchpoint
With close to 20 per cent of our retail happening online, it is possible that the only time a retailer may physically interact with the consumer is at the point of fulfilment. While it is unlikely that most retailers and brands would add their own dedicated fleets for last-mile delivery, there are numerous service providers that help manage this process in a manner tailored to the desired customer experience. Retailers and brands need to have a keen eye on the relationships and services they leverage to architect this vital stage of fulfilment.
Consumers live in a digital world of endless possibilities. But behind each of those possibilities is a digital promise that must be fulfiled in the real world, with real physical constraints. To manoeuvre these dynamics with dexterity, retailers and brands need to have a balanced strategy that not only accepts the two driving forces, but steers them to a competitive advantage.