Using physical stores to support digital shopper traffic might seem counterintuitive, but monthly rental fees are a sunk cost and inventory is already sitting on shelves. A reported 75% of consumers intend to continue shopping via online platforms even after stores reopen, meanwhile retailers report reducing their investment of on-hand inventory by 30%. This juxtaposition makes real-time inventory visibility a priority.
Retailers can’t afford to lose customers, especially when it has become so easy for digital shoppers to search the same product through alternative retailers. Using brick-and-mortar stores to fulfill orders beyond click and collect programs ensures that retailers manage a lean operation while meeting shopper needs.
I’m not suggesting that you eliminate your fulfillment centers, instead I’m asking you to reconsider a sunk cost and explore how it can work more efficiently for you. Increased usage of brick-and-mortar locations can help retailers manage cash flow, logistical challenges, and consumer demand.
1. Inventory visibility allows retailers to more effectively manage cash flow
Sudden store closures and intermittent re-openings left inventory stagnant and in some cases invisible. This is money that could have been used toward innovative capabilities that would drive additional traffic and increase basket size. Most retailers rely on back-end systems for purchasing and inventory tracking in multiple locations across distribution centers, fulfillment centers, and physical stores. Most systems don’t track inventory well from multiple locations, least of all to provide a customer with product availability.
Retailers can regain control of real-time inventory by connecting disparate systems to provide consumers with accurate information. Integrating data from systems like ERP, OMS, and POS creates a single source of truth so that retailers can operate efficiently and better manage cash flows. A single source of truth allows retailers more transparency that they can pass onto their customers, reducing their need to abandon their shopping cart on your site for other retailers.
2. The increase in digital commerce is putting pressure on final mile logistics infrastructure
COVID-19 shifted consumer behaviors, but it didn’t shift expectations. Research shows that consumers are increasingly expecting their orders to deliver within three days. Under normal circumstances that might be possible, but the surge in digital commerce orders is testing the infrastructure of final mile delivery couriers and is giving click and collect programs greater purpose. Click and collect programs including curbside and in-store pickups are alternatives that shorten the delivery window by usually providing a pickup window within four hours. Leveraging brick-and-mortar locations to fulfill digital commerce orders may cut down on the delivery time to a customer compared to a centralized fulfillment hub that relies on final mile partners.
The shorter delivery time is a consequence of two aspects. First, retailers can immediately allocate on-shelf inventory, with the added bonus of reducing the amount of unsold inventory. And second, retailers can ship consolidated orders from fulfillment centers to brick-and-mortar locations to fulfill BOPIS rather than shipping various parcels to individual shoppers’ residences.
This sounds like we’re taking two steps back rather than forward progress, but in times of COVID-19 retailers must focus on giving digital shoppers the flexibility to receive products in formats that work best for them, while offering them real-time inventory visibility.
3. Unpredictable consumer demand can leave excess inventory stranded
Through the pandemic, there has been one constant: consumers are shopping in more unpredictable patterns. Certain items suddenly spike and quickly fizzle — like puzzles, home office furniture, and school supplies. The short attention span for items and categories can make retailers wary of meeting shopper needs to grow revenue, while managing cash flows. Nobody wants stranded inventory that eventually needs to be discounted. Leveraging brick-and-mortar locations for all commerce transactions can help retailers manage costs, and consumers find the products they want with the option to ship or pick up in store.
4. Connected systems allow for streamlined operations
Leveraging brick-and-mortar locations to fulfill in-store and digital purchases requires deliberate integration. Retailer IT teams need to connect ERP, POS, and commerce systems (among others) to create seamless communication and enable real-time visibility. Typically custom code is used to unlock that data, but limit the communication flow between systems. MuleSoft’s API-led strategy allows retailers to connect any on-prem and cloud system to create a single source of truth. On average, retailers activate projects 2.5x faster than using custom code. In Anypoint Exchange, retailers can find over 100 out-of-the-box accelerators, connectors, and integration templates to get projects started faster and easier than ever before!
Interested to discover more?
- Webinar: Manage retail operations with real-time inventory
- Read: Building the connected retail experience
- Read: How to streamline order management with MuleSoft Accelerator for Commerce Cloud