A survey by PwC highlights that despite being vital components of a retailer’s ability to compete, many suppliers fail to meet the service levels required to satisfy both in store and online demand. The vast majority of retail supply chain directors surveyed (83%) cited that supplier strategies do not take into consideration the multi-channel needs of retail customers.
At one time retailers focused only on facilitating online sales through their e-commerce offerings. However, the way in which customers use online retail has changed significantly. Many still buy directly online but an increasing number of consumers will use a website first to find out more about products and services before visiting a store to make a purchase.
Some suppliers servicing retailers across multiple categories are already adept at fitting their delivery schedule around online retail requirements, whether items are ordered online or via services like click-and-collect. However, suppliers must apply this kind of thinking to anticipating demand for products and services in store as this can be equally as spontaneous and fast-moving.
Even for those suppliers that are already doing this, it is not advisable to become complacent. Suppliers should continuously work alongside their retail clients to gain a better understanding of the most popular products being purchased and through which channels. This means putting a system in place that treats online and in store demand equally. It is no longer safe to assume that online is the fastest moving route to market – in store demand is directly influenced by online research so it is even more important that initial interest is capitalised on. This means retailers must have the right stock and quantities actually available in-store.
Instead of waiting for direction from a retailer, suppliers can help support the multichannel experience proactively. This could be by making efforts to understand the structure of their retail clients’ warehouse networks in relation to which channel products are being sold through. For example, it is likely that a retailer will have different warehouse locations for different types of sales online and in-store. Subsequently, suppliers should be prepared to source and deliver products separately and in line with the immediate needs of the retailer. For example, if the retailer chooses to hold a sale on a specific product line to take advantage of increased demand from customers. This means that depending on the channel, deliveries will need to be made to different locations at different frequencies and times of the day.
Of course, all of this can only come from a core understanding of a retailer’s dynamics in terms of its structure and the needs of its customers. This can only be gained through regular contact to obtain feedback. However, retailers themselves must actively demand more from a supplier’s service if it fails to support and enhance their multi-channel focus. Complacency is the enemy so if a supplier is not being proactive enough in their approach to improving service levels, then retailers must not shy away from taking them to task.
Suppliers are in pole position when it comes to supporting a drive by retailers to match product type and availability to different channels and even different store formats. However, the survey by PwC indicates that this realisation is taking time to sink in amongst some vendors. It is therefore vital that suppliers to the retail sector examine their approaches to servicing the off as well as online components of their clients’ offerings and make sure that these are treated with the same level of urgency.
Nigel, business specialist at Office Depot