Philip Hall, Managing Director Europe, CommerceHub The warehouse is an inevitable part of any retail supply chain, providing the backbone…

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Philip Hall, Managing Director Europe, CommerceHub

The warehouse is an inevitable part of any retail supply chain, providing the backbone for retail operations. The boom of ecommerce has driven the evolution of the warehouse, from merely storing stock to becoming a fulfilment hub dealing with hundreds – if not thousands – of ecommerce orders every day.

With new retail challenges constantly arising, from demands for same-day or next-day delivery to new economic pressures, retailers need agility, adaptability and a supply chain that is demand-driven and responsive with the ability to evolve and improve to meet ever-changing conditions. Add this to the need for retailers to be increasingly aware of how much waste they’re creating and its impact on the environment, and the challenge increases. How can retailers meet these challenges head-on, while also protecting their margins and keeping the customer experience intact?

Getting ready for a long-term commitment

Despite the challenging environment, retailers are determined to put growth on the agenda. Research shows that 75% of retail decision makers believe that adding more products or product categories to their ecommerce channels is a top priority for businesses, and 84% of those who are making expanding their product range a priority are doing so in the hope that it will increase revenue. There are real benefits that can be reaped from an expanded range; it can help bring web traffic and provide increased choice for customers. Retailers who use a drop ship or marketplace model can expand their range without the need to invest as much in warehouse expansion, resources and inventory.

Even with this in mind, 64% of retail decision makers believe that increasing warehouse capacity is the most viable and attractive way to deal with an expanded range online. Owning something is perceived as being a more  comfortable path, but is it affordable? Warehouses can limit retailers in more ways than one. Warehouse leases are often a long-term commitment, with many ranging from five to ten years. So when a supply chain director signs on the dotted line to build that new warehouse, they are placing a bet that the level of demand will be there to warrant needing it several years down the road. For retailers to truly prioritise expansion, they must consider other options that add flexibility and visibility into their supply chain, allowing them to be both proactive and reactive to demand and anomalies that might impact them.

Riding the wave of uncertainty

Uncertainty in the retail sector dominated the majority of 2019, leaving many retailers choosing to invest in contingency plans to accommodate issues around stock availability and fulfilment, particularly across borders. However, uncertainty is not a one-off event, a global supply chain can be derailed by any number of events, from failure of shipping companies to strikes. During uncertain periods, a warehouse can be a drain on capital and resources, and retailers must look to the future and protect their margins as much as possible.

So what’s the alternative? Nearly 50% of businesses are currently utilising drop ship and/or retailer marketplaces, with an additional 20% planning to adopt one of these approaches within the next 12 months. The benefits speak for themselves, with the ability to help both UK and global supply chains become considerably more flexible, reduce operational costs and offer more products via a direct-to-consumer strategy. It also helps to minimise the risks and cost associated with purchasing and moving stock unnecessarily, particularly during periods of uncertainty and heightened demand, possibly even negating the need to build that expensive warehouse.  The advantage of dropship over marketplace is that in terms of control, it’s the next best thing to having your own warehouse, as retailers can still maintain full ownership of the customer experience and top line revenue.

‘Never out of stock’

Historically, drop-ship models were used for ‘difficult-to-sell’ or ‘unwanted’ clearance products; however, dropship has evolved to become a powerful tool for retailers that never want to be out of stock of particular items. If a retailer has several suppliers or distributors fulfilling similar items such as toasters or televisions, this solution can keep the customer experience intact if one source of supply goes out of stock. Drop ship can be a viable backfill option for owned inventory products if the drop-ship solution has inventory by location capabilities.

Drop shipping also enables retailers to engage with smart fulfilment based on customer location, helping to optimise the supply chain further and reduce shipping costs for the retailer, which can also translate into lower customer pricing. For example, if a customer in Leeds orders a television but the distribution centre is in Southampton, shipping the product will cost the retailer more. By using smart fulfilment, the customer location can be married with the nearest source of supply.  The importance of this capability is recognised by retailers as 46% of retail decision makers valued the fast shipping and delivery flexibility of drop shipping.

By utilising a sophisticated drop-ship model, which comes with an inherently distributed network of inventory, retailers can avoid having a single point of failure. Retailers can, therefore, increase the pool of inventory available to them without the costly process of investing in more warehouses and buying more stock. Ultimately, this creates a better, less frustrating shopping experience for the customer, who is able to find the item they want and receive it on time.

Furthermore, this method can help retailers to work towards their sustainability goals. With an optimised supply chain and smart fufilment, retailers can make sure they are not holding unnecessary stock that may go out of season quickly, reducing waste. Less waste, of course, is not only beneficial for the environment and the global sustainability agenda, but also saves the retailer significant funds and protects profit margins. With the visibility and accuracy inventory by location offers, better decisions can be made to reduce transport costs.

Conclusion

Retailers don’t need to buy another warehouse; they need to invest in flexible solutions that maintain the customer experience while optimising the supply chain to keep pace with changing demands, all the while reducing waste and protecting profit margins. Drop shipping allows retailers to expand globally, maintain low overhead and provide a great customer experience without capital investment tied up in warehousing, that could become a liability when the going gets tough.

Please note, all statistics sourced from a CommerceHub survey held in 2019 which drew on the views of a 100 decision makers in retail.

Critical guide published today calls for effective cyber security lifecycle management of IoT devices to improve the security of retail…

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Critical guide published today calls for effective cyber security lifecycle management of IoT devices to improve the security of retail systems and the protection of customer data in a stringent GDPR era. 

Axis Communications, the market leader in network video technology, has published its latest whitepaper, Cyber security: the biggest threat to retail which highlights the increasing threat posed by cyber-attacks to today’s retail industry. The paper documents the measures that should be understood by data controllers, loss prevention & security personnel through to heads of operations to ensure the highest levels of security and provide the appropriate education and training for all key stakeholders to effectively mitigate the mounting cyber security threat. 

The growth in and use of IoT devices and cloud technologies have opened up boundless possibilities for modern retail organisation across physical and digital platforms. However, customer data is at the heart of a frictionless shopping experience and presents an attractive commodity to cybercriminals, with attacks growing in number on those retailers whose systems are inadequately secured. It has been reported that in the last 12 months there have been 19 significant data breaches[1], which present a major risk for both retailers and customers. 

In addition to the immediate disruption and downtime a breach can cause, the damage to the reputation of a business or brand can be lifelong. Furthermore, GDPR related fines from the ICO can now be as much as €20m or 4% of global annual turnover, whichever is higher, and demands that necessary steps be taken to guard against attack and protect existing infrastructure. Axis’ whitepaper creates awareness of the challenges being faced and looks at how effective cybersecurity lifecycle management of IoT devices will help to better manage security and ultimately maintain customer trust.

Download the whitepaper – Cyber security: the biggest threat to retail 

“Any organisation that generates or manages personally identifiable information (PII), effectively any data that could potentially identify a specific individual, must comply with GDPR. Establishing a truly secure retail solution can only be accomplished if security has been analysed at every stage. The key is to ensure that everyone involved understands the security implications of a breach and how to prevent one. Collaboration with system vendors, integrators and installers is also hugely important, and conversations across the supply chain will ensure requirements are met and security risks are adequately addressed,” Steven Kenny, Industry Liaison Architecture and Engineering, Axis Communications.

Alongside greater awareness of the need to comply with the GDPR, the Axis whitepaper stresses the importance of looking to guard against system vulnerabilities by working with trusted vendors who can install only those security technologies that are deemed to be Secure by Default. These technologies have been built from the ground up with cybersecurity considerations at the forefront. Technologies that are cyber secure offer peace of mind when connected to a network, and come with assurances that stringent guidelines are followed during the design and manufacturing process. Surveillance camera technology designed and manufactured in this way assures retailers that these security solutions will not be used as a backdoor into the network; such is the risk of introducing non-secured hardware.

Key points covered in the retail whitepaper include:

  • Review of cybersecurity challenges – Supply chain attacks, IoT vulnerabilities, the impact of operational downtime
  • GDPR, data protection and privacy – Examining the necessary actions to ensure full compliance with the GDPR and DPA 2018
  • Video surveillance insights – Understanding how data analysis can inform security and business decisions, and supply chain evaluation
  • Managing security effectively – Processes and tools to help the design, development and testing of systems in accordance with cybersecurity principles
  • Converged security – A collaborative approach to addressing cybersecurity risks

“The retail industry is deemed the most at risk to cyber threats. It is crucial to find the balance between enhancing the customer experience and maintaining GDPR compliance; providing adequate security whilst not violating customer privacy,” says Graham Swallow, Retail segment lead, Northern Europe, Axis Communications. “While video surveillance systems are a necessity within the retail environment, many organisations have re-evaluated their entire strategy in order to ensure full GDPR compliance. Retailers must be able to rely on technologies that support their operational requirements and address associated risks, while at the same time, supporting IT security policies.”

This whitepaper provides retailers with expert guidance, highlighting the appropriate policies and procedures around the cybersecurity of IoT devices, and reinforces the importance of selecting trusted vendors and partners. Axis is passionate about using technology to help create a smarter and safer world. This is demonstrated by a commitment to helping retailers understand the benefits of connected physical security systems that deliver on the promise of better protection of the business and customer.

Retailers know how important the customer experience is – and this can’t be forgotten around the busiest shopping period of…

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Retailers know how important the customer experience is – and this can’t be forgotten around the busiest shopping period of the year. In fact, in 2018 UK shoppers spent £4.75 billion in Boxing Day sales and £1.4 billion on the last Saturday before Christmas, known as ‘Super Saturday.’ With research showing that improving the customer experience and investing in new ways to engage customers is critical to the ongoing success of retailers, the retailers who are able to create a seamless, convenient experience for customers will have the upper hand. To do this effectively, they’ll need to bring together physical and digital while offering an amazing product selection that’s readily available and can be delivered fast.

Philip Hall, Managing Director Europe at CommerceHub, shares his top three tips to give retailers an advantage during this year’s peak shopping season.

1. Embrace the Physical and Digital for More Consumer Convenience

With the adoption of cloud-based software and smart mobile devices, retailers’ ability to connect their physical and digital presence has become significantly easier, as shown by the rise of click and collect and more return options. Every consumer has a different purchasing pattern – which is largely driven by convenience – meaning that retailers need to focus on having the right products in the right places.

Because convenience plays a large role in customer satisfaction, retailers need to take action. According to a recent survey, 68% of consumers said they preferred click and collect when making purchases. When consumers elect to pick up their purchases in-store, retailers are not only able to reduce their shipping costs, but also to sell even more product, as 85% of these consumers tend to make additional purchases once they come in-store to retrieve their orders – something that could easily feed into holiday sale buzz.

2. Put an End to Cancelled and Out of Stock Messages 

“Right time, right place” in today’s consumer speak actually means “right here, right now,” – something that is only becoming more ingrained in retailers’ strategies. It’s not uncommon for consumers to have experienced the frustration of hopping online to purchase the perfect gift and getting hit with the “out of stock” message – a challenge that typically ends in an abandoned cart and searching for the product elsewhere.

Retailers stand to miss out on nearly $1 trillion in sales because they don’t have what customers want to buy. And while this problem stirs agitation and causes stress for consumers, it is something that retailers can easily avoid with the right approach. By tapping into virtual inventory enabled through drop shipping and executing on proper resource planning and logistics execution, retailers could potentially have no sell outs at all, enabling them to keep customers happy and maintain their brand promise. And some retailers are already recognising the potential, with research from CommerceHub showing that 46% of retailers value the fast shipping and delivery of drop shipping and over a third acknowledging the better customer experience drop shipping will bring.

3. Meet and Exceed Delivery Expectations

A final key to success as we enter the UK’s busiest shopping period will be perfecting shipping and delivery. Gone are the days when getting packages a week or longer after an order is placed is acceptable. New and improving technology is giving retailers the ability to strategically expand product ranges, fulfil orders faster than ever before and track deliveries to better meet customer needs and expectations. By implementing these advanced back-end processes, communications between retailers and fulfilment/shipping centres have never been more seamless.

Technology is also giving retailers more visibility into fulfilment processes, which is enabling them to create routine efficiencies and capture data to drive their businesses forward year after year. What’s more, these insights can help drive real-time decision making, allowing retailers to keep consumers aware of the status of their orders and stay ahead of delays in ways that couldn’t be managed before, which supports retailers’ growing need to stay ahead of customer expectations.  

Conclusion

Retailers need to ensure that the customer, and their satisfaction, is at the core of every strategy – especially in the coming months when the sales potential is so high. Whether it is a newly implemented or enhanced approach, a retailer’s ability to carry out a seamless crossover between physical and digital retail, minimise out-of-stock cancels and meet and exceed delivery expectations is essential to their success. And with this success comes happy customers, who in turn, will only be coming back for more.

AI is no longer science-fiction writers dream, it’s being implemented in industries all over the world. We look at 5…

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AI is no longer science-fiction writers dream, it’s being implemented in industries all over the world. We look at 5 examples of how AI is revolutionising the retail experience Written by: Dale Benton

Marks and Spencer

In early 2019, M&S announced a new Technology Transformation Program, one that will allow M&S to become a digital-first business and deliver key improvements in customer experience. As part of this transformation, M&S has partnered with Microsoft to investigate and test the capabilities of technology and artificial intelligence in a retail environment. M&S will look to integrate machine learning, computer vision and AI across every endpoint – both in its stores and behind the scenes. Every surface, screen and scanner in its stores will create data – and enable employees to act upon it. Every M&S store worldwide will be able to track, manage and replenish stock levels in real time – and deal with unexpected events.

https://www.marksandspencer.com/
https://twitter.com/marksandspencer
https://www.facebook.com/MarksandSpencer

John Lewis/Waitrose

The John Lewis Partnership is currently partaking in a three-year trial, deploying robots to one of its farms, which grows produce for its Waitrose & Partners brand.  The robots, named Tom, Dick and Harry, are delivered in partnership with the Small Robot Company. Each will be equipped with a camera and AI technology to gather topographical data, while autonomously obtaining accurate, plant-by-plant data in order to enable higher farming efficiency.  The data will also be used to develop further machine learning capabilities. The trial will also provide the John Lewis Partnership’s Room Y innovation team with valuable insight to support innovation and inform how robotics and Artificial Intelligence (AI) could be used further in other areas of the business.

https://www.johnlewis.com/
https://twitter.com/JLandPartners
http://www.facebook.com/johnlewisretail

Walmart

One of the biggest retail companies in the world has been piloting and implementing artificial intelligence solutions across its stores for a number of years.  As part of a technology program, called Missed Scan Detection, Walmart has deployed AI-equipped cameras in more than 1,000 of its stores. These cameras, developed in part with Everseen, tracks and analyses activities at both self-checkout registers and those manned by Walmart employees. If an item isn’t scanned at checkout, the cameras will detect the and notific a checkout attendant of the problem. The AI technology allows Walmart to monitor its inventory product quantities, but also significantly reduce theft across its stores.

https://www.walmart.com/
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Amazon

Amazon Go represents a whole n era of shipping. The concept is simple, walk into an Amazon Go store, pick up whatever you want and walk back out.  The idea is to create a “Just Walk Out” experience. Described as the “most advanced shopping technology”, customers simply download the Amazon Go app. Powerful machine learning and AI technology automatically detects when products are taken from or returned to the shelves, keeping track of them all in a virtual cart. Once customers leave, Amazon will collate all of the data and produce a receipt and charge the customer’s Amazon account.

amazon.co.uk

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https://www.facebook.com/AmazonUK/

Morrisons

One of the UK’s largest food retailers with more than 120,000 colleagues in 494 stores serving over 11 million customers every week, Morrisons turned its attention to AI with JDA Software. Looking to vastly improve the customer experience, Morrisons looked at reducing queues at checkouts, and improving on-shelf availability. Morrisons invested in Blue Yonder – a Demand Forecast & Replenishment solution from JDA, which uses Artificial Intelligence (AI) technology to improve demand planning and reinvigorate replenishment based on customer behaviour in every store. Over a 12-month period, Morrisons was able to generate up to 30% reduction in shelf gaps and a 2-3 day reduction in stockholding in-store. AI technology has also enabled Morrisons to close the execution gap, optimizing availability while reducing wastage, enhancing shelf presentation and meeting stockholding targets.

groceries.morrisons.com
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The future of the supply chain industry has long been held in the hands of technology and innovation. These have…

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The future of the supply chain industry has long been held in the hands of technology and innovation. These have shifted the goalposts, placing customers in the driving seat and changing how they engage with brands and business. In a recent article by James Manyika and Susan Lund in the Harvard Business Review, this shift is taken into deeper context as they examine how the ‘Next Era of Globalization will be Shaped by Customers, Technology, and Value Chains’. Kicking off with the statistic that three quarters of companies say that their global investment strategies are changing thanks to uncertainty over trade policy.

At the NRF 2019 Big Show, this trend was placed in sharp relief as brands showcased the technology designed to drive customer experiences. From artificial intelligence to virtual reality, numerous solutions were on display, all providing the sector with much-needed insight into what could potentially lie ahead and what could be used, right now, to transform customer experiences.

While on the topic of experiences, Ford has decided to shift its focus from comfortable cars to intelligent beds. The company believes that these high-tech beds will save marriages as an embedded conveyor belt – built with car technology – gently rolls unruly sleepers back into position. Using the Lane Assist technology, it’s called, somewhat unimaginatively, the Lane Keeping Bed.

Pensa Systems and Birdzi, two startups immersed in the development of retail experience technology solutions, have revealed they’re joining a Dallas-based venture firm called RevTech. The company specialises in retail technology and tools that allow stores to become part of the so-called Age of Amazon with innovations in in-store drones, voice-activated assistants and more.

Retailers are under pressure to invest in digital and its potential. The question is – who will succeed? The digital leader or the digital explorer? An in-depth article in Retail Customer Experience tries to answer the question as to which mindset is winning the race to digital transformation, and why.

In New Zealand, the government announced a proposal to merge all of the 16 polytechnics around the country into a single national institute. The goal is to reform the organisations in an attempt to redress some of the challenges it faces in falling enrolments and increasing debts.  According to the report, out of the 16 institutions, nine were in deficit while 11 suffered falling enrolments in 2017.

Also in the news was: the Selfcare Summit 2019 that reimagines retail for wellness, Virtual Vision’s launch of a platform designed to create smarter physical stores, the partnership between the Retail Industry Leaders Association (RILA) and the startup Smarter Sorting for AI-based compliance,  an analysis as to what lies ahead for retail with regards to predictive analytics, and FDA testing of a secure supply chain pilot programme.