Kurt Salmon: Investing in omni-channel ship-from-store

24 July 2015 Consultancy.uk

UK retailers are investing heavily in the development of a mobile and omni-channel retail experience for their customers, research report by Retail Week and Kurt Salmon finds. The supply chain side of the retail equation is gaining less investment, with the ability to deliver conditioned by the level of background sophistication. One way forward is to implement the convenience of a ‘ship-from-store’ model for improved supply side accessibility.

In report from Retail Week in association with Kurt Salmon, titled ‘Retail 2015’, developments in the UK’s retail sector as a whole are surveyed. The report discusses the results of a survey of 25 retail executives, with questions ranging from economic issues facing retailers’ core business to changes expected within the industry over the coming year. One of the findings is that investment in mobile and omni-channel retail is a top three priority for 60% of the retailers.

Whereas the omni-channel is garnering considerable attention, the creation of a dynamic supply chain is receiving limited attention. The survey finds that, while customers continue to demand on the spot services and product fulfilment options, only 29% of the executives believe investing in a dynamic supply chain is a priority. Furthermore, only 25% are focused on investing in stock. “[…] having visibility of stock, along with the flexibility to fulfil orders from any inventory holding location, is paramount to support growth, maximise margins and minimise cost to serve within an omni-channel business,” comments Judy Blackburn, Head of the Supply Chain practice at Kurt Salmon UK, and co-author of the report.

Omni-channel priorities

Getting an omni-channel view of stock and customers is integral in developing a supple supply chain that is able to service customer demand ‘on demand’. “The supply chain, alongside organisational structure and technology, are the three pillars that support a successful omni-channel business. Bricks and mortar retailers should, therefore, be looking at ways to optimise their existing store supply chain to work across multiple channels,” adds Blackburn.

One way to create a flexible and highly developed supply chain is to develop a ‘ship-from-store’ approach, where stores become mini-warehouses that are integrated into a wide distribution network through order management systems. “In this way they can gain considerable benefits from increased stock availability, as well as positioning inventory closer to their customers and, therefore, reducing transport costs,” remarks Blackburn. “With the additional uncertainty about how much further online will grow, all retailers should be actively reviewing their fulfilment capabilities and  capacities and developing contingencies now so that there is not a repeat of the high profile failures around peak trading events such as Black Friday  and Christmas. Using the store network to fulfil orders is a good way to supplement distribution capacity during particularly extremely busy periods.”