12 SCS : Future Supply Chain www.supplychainstandard.com
The retail
Complexity is the greatest
challenge facing retailers
competing for consumer
spend in a burgeoning
multi-channel environment.
But for those that can
master it, opportunities
abound. By Nick Allen.
Retailers are faced with a rising tide of
complexity as consumers look for, and expect,
an increasing array of options when it comes to
shopping. The dynamics of the high street have
changed radically over the past ten years and are
broadening out to encompass: online purchasing,
catalogues, tele-sales, mobile devices, multiple delivery
options, in-store pick-up, ordering at kiosks – as well as
a widening choice of means for returning goods.
Fierce competition among retail brands is forcing
the pace in terms of service options, all to win over an
increasingly fickle and cash-strapped consumer. With
the internet creating price transparency on products,
competitive advantage is now gained through offering
the best service by whatever channel the consumer
desires. Of course, this presents an expanding field of
complexity for retail businesses, both in terms of IT
requirements and the operational means to effect
fulfilment. Its impact on the supply chain has yet to be
fully realised.
Under these demanding circumstances, how are
retailers going to compete to offer the consumer the
best price and service at a cost that equates to a
reasonable margin? The challenges are many, but
then, so are the opportunities.
In particular, internet sales are gaining pace and
most of us now use the internet for purchasing
Christmas gifts. According to survey results from
eDigital Research and IMRG, 71 per cent of us were
prepared to do half or more of our shopping online
this Christmas.
However, the findings also support current
assumptions that price will continue to dominate the
online marketplace, as people are prepared to shop
around to get the best deals. Competition for business
is fierce as the report indicates that 88 per cent of
shoppers research and price compare before they buy,
with almost a quarter of them researching while instore
or at home via their mobile phones.
But if retailers are going to keep costs under control
and retain healthy margins they are going to have to
look very carefully at how they manage their supply
chains. The rapid evolution of multi-channel retailing
has led to fragmented inventories and duplication of
supporting infrastructure, hindering integration and a
cohesive solution to this complex problem. Maturing
channels now offer the potential to consolidate and
streamline inventories to offer greater flexibility in
responding to consumer needs.
According to Steve Smith, senior vice president
EMEA at Manhattan Associates, real-time inventory
visibility and the ability to allocate that inventory to
the most appropriate channel, in the most costeffective
way, will offer a significant advantage to those
with the capability.
The dramatic downturn in consumer spending and
the impact of tighter credit conditions on the wider
economy over the past 18 months has thrown forecast
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