Retail Store In The Supply Chain

The retail store must take a more prominent role in the extended supply chain to support the consumer demands in the omni channel market.  Consumers are driving to create a true omni channel market where channels blend for both shopping and purchasing.  Large retail store chains have an advantage in this market as a result of their chain of stores located conveniently not only for consumer shopping but also within a one day delivery service of probably the majority of their customers.  Retailers would be foolish to eliminate this advantage because of a shift in purchasing from the brick and mortar store to eCommerce.  Shrinking the number of retail stores also shrinks the physical customer base with easy access and real physical reminders of the retailer which will then act as an additional negative force on the retailer sales.

Building the retail store into a value added part of the extended supply chain is relatively simple from an execution perspective and only requires a focus on;

• Expanding storage to increase the inventory back stock to support the eCommerce order fulfillment from the store.
• Increasing the headcount in the store to support improved inventory control and fulfillment activities.
• Expanding parcel services into and out of the store to support the increase velocity of inventory replenishment into and direct to consumer shipments.

The retail store then becomes a showroom that provides a place for consumers to try out and touch product to complete their purchase decision and then supports delivery to the consumer in the manner that is most convenient for the consumer.

The challenge for retailers is the paradigm shift in their strategy to modify the store into a showroom with distribution capabilities and capacity.  The current retail store strategy of providing all product on the store floor to simplify consumer shopping and reduce the headcount required to manage a back stock area is the opposite of requirements in today’s market.  The retail store now must become another fully functional link in the retail extended supply chain to support the changing consumer demands.  This shift in strategy can eliminate the losses anticipated by store liquidation and increase employment which is always good for retail sales.

As a point of comparison reference it is very interesting that Amazon is expanding into the retail brick and mortar store market while many large legacy retailers are planning on shrinking their footprint.  I believe this is because Amazon sees the potential of the brick and mortar presence to support the omni channel consumer demands.  Retailers must now invest in this potential to build an extended supply chain network that can support one day delivery service levels to the majority of customers.  The pieces are all in place and simply require the vision to put them together into a cohesive package.

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?