Victoria Kickham started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for DC Velocity.
Meeting consumer needs in today's retail environment is becoming increasingly challenging, especially for organizations rooted in brick-and-mortar operations. As they struggle to address changing consumer shopping preferences—driven in large part by the "Amazon effect"—many are finding that they must rethink in-store operations in order to provide a seamless experience for shoppers, whether those shoppers choose to buy online, shop in the store, or some combination of the two.
"There is this expectation for immediate gratification, and Amazon is pioneering ways to deliver it. Meanwhile, retailers are re-evaluating how they can respond to this need as well," says Karen Bomber, director of retail industry marketing for Fort Mill, S.C.-based Honeywell Safety and Productivity Solutions, which provides hardware and software solutions for retailers. "Consumers don't care if they got the product online [or] at a store; they just want a single, unified shopping experience. Retailers are trying to manage through this expectation."
One of the biggest challenges retailers must manage is the changing work requirements of in-store associates. No longer there solely to meet the needs of traditional walk-in traffic, associates must now accommodate online shoppers who are picking up or returning items in the store as well as prepare ship-from-store e-commerce orders—entirely different tasks than they've had to perform in the past. Supply chain service providers say such changes are reshaping the retail store from a people, process, and technology point of view, with an emphasis on the latter aspect.
"Technology is a huge piece of this," Bomber says, emphasizing the need to prepare in-store associates to meet changing demands. "It comes down to empowering the associate and putting technology into the associate's hands."
START WITH A PLAN
There are some prerequisites when it comes to improving the retail fulfillment process, and most have to do with inventory planning and management. Rod Daugherty, vice president of product strategy for Atlanta-based cloud supply chain planning solutions provider Blue Ridge Global, explains that companies must first have a good e-commerce platform in place, along with solid strategies for planning and managing their inventory investment across all channels. This means that their e-commerce channel doesn't operate in a vacuum and that they have or are working toward a single, unified view of inventory that allows them to position products where they are most likely to be needed. The latter requires optimizing in-store inventory for both "click and collect" (in which buyers purchase products online and pick them up in the retail store) and ship-from-store fulfillment. A single view of inventory also helps promote accuracy, which is key to improving fulfillment and providing the best possible customer service, Daugherty and others agree.
"As obvious as this may sound, the first thing retailers must have is inventory accuracy at the store level. If you don't know how much you have on hand ... then your B2C [business-to-consumer] e-commerce fulfillment from the store isn't going to work," Daugherty explains. "I know that sounds terribly obvious, but I still run into retail companies in some verticals that aren't very good at that.
"I would say that's the first thing," Daugherty adds. "That's table stakes."
ADD TECHNOLOGY, SERVICES
Technology is the next piece of the puzzle, and it can be used to create operational efficiencies as well as improve customer-engaging activities. Bomber points to handheld mobile devices, which are increasingly finding their way into the store, as one example. Such devices put information at an associate's fingertips, allowing them to move through the store with an automated system for filling orders. The devices can include scanners, RFID (radio-frequency identification) readers, printers, and rugged mobile handheld computers designed to fit a wide variety of retail environments. Honeywell offers a "connected retail" solution that combines a handheld computer with voice-directed technology (in the form of a wireless headset) and software that connects to a retailer's inventory management system for this very purpose. Such systems also allow in-store associates to receive information and react in real time, improving the replenishment process as well.
In a similar way, mobile technologies are being used for point-of-sale (POS) transactions, helping improve the in-store experience for both online and in-store shoppers, Bomber adds. Although most retail stores still use traditional point-of-sale terminals, many are beginning to complement that approach with mobile POS technology to speed up the checkout process for both click-and-collect and walk-in traffic. Mobile POS technology includes handheld tablets and smaller devices used for payment—think of the last time you purchased something at an Apple store—as well as more rugged industrial handheld devices you may see in a big box retail outlet.
Although convenience and efficiency are driving many of these changes, experts also point to underlying demand for faster delivery service as a key component of the evolving retail store. Waiting for home delivery can take too long for some customers, who will prefer more immediate click-and-collect options, for instance. There is also growing demand for "access point" pickup, according to Louis DeJianne, director of retail marketing for Atlanta-based global transportation and logistics giant UPS. Through UPS's Access Point Network, customers can buy online and pick up at a conveniently located access point when home delivery won't work or there is no retail outlet nearby (provided the retailer has included UPS Access Point locations in its shipping options). UPS's network includes nearly 9,000 locations in the U.S. and more than 27,000 globally for both business and consumer use—the latter driven by changing consumer purchasing habits. Access points include independently owned and operated neighborhood businesses, UPS Store locations, and self-service lockers.
"What we're seeing is retailers looking for any number of opportunities to improve the customer experience and shorten the time period between time of purchase online and the consumer receiving it," says DeJianne, emphasizing the need for a customized approach to adapting retail fulfillment services. "Every retailer has to look at what it needs to accomplish in terms of that customer experience and then design [its processes] according to those needs."
FOCUS ON TRAINING
Bomber, Daugherty, and DeJianne agree that employee training is a crucial part of the mix no matter what approach retailers take to respond to changing fulfillment demands. Training employees on how to use new technology is one thing, but they also need to learn how to perform distribution center-like functions if they are to successfully integrate the online and physical store experience, Daugherty says. Store associates must learn how to pick, stage, and ship orders as well as gain an understanding of the logistics process. This becomes increasingly challenging in an environment staffed by part-time workers and temporary or seasonal help.
"That's a big challenge that retailers face," he says, adding that they must "put discipline into the training process and into filling those e-commerce orders."
DeJianne agrees, emphasizing the need for a more disciplined approach to hiring as well. This becomes especially important in a strong economy, as business picks up across many industries, as well as when staffing to meet seasonal demand. He says he is already seeing retailers invest in this aspect of their business today.
"Retailers are starting to hire people much earlier in the process and bring them on board so that they are comfortable," he says. "[Increased] volume and growth requires retailers to ramp up their personnel and ensure new technology works properly. Staffing has become a very important piece of the brick-and-mortar retailer's day."
“While there have been some signs of tightening in consumer spending, September’s numbers show consumers are willing to spend where they see value,” NRF Chief Economist Jack Kleinhenz said in a release. “September sales come amid the recent trend of payroll gains and other positive economic signs. Clearly, consumers continue to carry the economy, and conditions for the retail sector remain favorable as we move into the holiday season.”
The Census Bureau said overall retail sales in September were up 0.4% seasonally adjusted month over month and up 1.7% unadjusted year over year. That compared with increases of 0.1% month over month and 2.2% year over year in August.
Likewise, September’s core retail sales as defined by NRF — based on the Census data but excluding automobile dealers, gasoline stations and restaurants — were up 0.7% seasonally adjusted month over month and up 2.4% unadjusted year over year. NRF is now forecasting that 2024 holiday sales will increase between 2.5% and 3.5% over the same time last year.
Despite those upward trends, consumer resilience isn’t a free pass for retailers to underinvest in their stores by overlooking labor, customer experience tech, or digital transformation, several analysts warned.
"The 2024 holiday season offers more ‘normalcy’ for retailers with inflation cooling. Still, there is no doubt that consumers continue to seek value. Promotions in general will play a larger role in the 2024 holiday season. Retailers are dealing with shrinking shopper loyalties, a larger number of competitors across more channels – and, of course, a more dynamic landscape where prices are shifting more frequently to win over consumers who are looking for great deals,” Matt Pavich, senior director of strategy & innovation at pricing optimization solutions provider Revionics, said in an email.
Nikki Baird, VP of strategy & product at retail technology company Aptos, likewise said that retailers need to keep their focus on improving their value proposition and customer experience. “Retailers aren’t just competing with other retailers when it comes to consumers’ discretionary spending. If consumers feel like the shopping experience isn’t worth their time and effort, they are going to spend their money elsewhere. A trip to Italy, a dinner out, catching the latest Blake Lively and Ryan Reynolds films — there is no shortage of ways that consumers can spend their discretionary dollars,” she said.
Editor's note:This article was revised on October 18 to correct the attribution for a quote to Matt Pavich instead of Nikki Baird.
The market for environmentally friendly logistics services is expected to grow by nearly 8% between now and 2033, reaching a value of $2.8 billion, according to research from Custom Market Insights (CMI), released earlier this year.
The “green logistics services market” encompasses environmentally sustainable logistics practices aimed at reducing carbon emissions, minimizing waste, and improving energy efficiency throughout the supply chain, according to CMI. The market involves the use of eco-friendly transportation methods—such as electric and hybrid vehicles—as well as renewable energy-powered warehouses, and advanced technologies such as the Internet of Things (IoT) and artificial intelligence (AI) for optimizing logistics operations.
“Key components include transportation, warehousing, freight management, and supply chain solutions designed to meet regulatory standards and consumer demand for sustainability,” according to the report. “The market is driven by corporate social responsibility, technological advancements, and the increasing emphasis on achieving carbon neutrality in logistics operations.”
Major industry players include DHL Supply Chain, UPS, FedEx Corp., CEVA Logistics, XPO Logistics, Inc., and others focused on developing more sustainable logistics operations, according to the report.
The research measures the current market value of green logistics services at $1.4 billion, which is projected to rise at a compound annual growth rate (CAGR) of 7.8% through 2033.
The report highlights six underlying factors driving growth:
Regulatory Compliance: Governments worldwide are enforcing stricter environmental regulations, compelling companies to adopt green logistics practices to reduce carbon emissions and meet legal requirements.
Technological Advancements: Innovations in technology, such as IoT, AI, and blockchain, enhance the efficiency and sustainability of logistics operations. These technologies enable better tracking, optimization, and reduced energy consumption.
Consumer Demand for Sustainability: Increasing consumer awareness and preference for eco-friendly products drive companies to implement green logistics to align with market expectations and enhance their brand image.
Corporate Social Responsibility (CSR): Companies are prioritizing sustainability in their CSR strategies, leading to investments in green logistics solutions to reduce environmental impact and fulfill stakeholder expectations.
Expansion into Emerging Markets: There is significant potential for growth in emerging markets where the adoption of green logistics practices is still developing. Companies can capitalize on this by introducing sustainable solutions and technologies.
Development of Renewable Energy Solutions: Investing in renewable energy sources, such as solar-powered warehouses and electric vehicle fleets, presents an opportunity for companies to reduce operational costs and enhance sustainability, driving further market growth.
The clean energy transition continuing to sweep the globe will give companies in every sector the choice to either be disrupted or to capitalize on new opportunities, a sustainability expert from Deloitte said in a session today at a conference in Orlando held by the enterprise resource planning (ERP) firm IFS.
While corporate chief sustainability officers (CSOs) are likely already tracking those impacts, the truth is that they will actually affect every aspect of operations regardless of people’s role in a business, said John O’Brien, managing director of Deloitte’s sustainability and climate practice.
For example, regulatory requirements on carbon emissions are expanding in every region, which means that even if a specific company doesn’t have to change its own practices, it will almost definitely need to flex to accommodate its partners and suppliers as they track scope 3 emissions or supply chain practices.
Likewise, companies are starting to challenge the classic concept of “force majeure” events than can cancel service providers’ contractual duties due to unforeseeable weather events. As the new argument goes, extreme weather patterns increasingly occur in accordance with climate scientists’ forecasts, so those hurricanes and wildfires are in fact foreseeable after all.
But one strategy for coping with the cost of those changes is to mine the power of the data that most companies will soon need to collect as part of their evolution. Instead of simply tracking its trucks to trim their routes and emissions, a transportation company could use the same data to manage their maintenance and fuel consumption.
“The climate management transition is going to be a massive disruption, but with that comes massive opportunity,” O’Brien said from the keynote stage at the “IFS Unleashed” show. “Don’t waste compliance efforts just on compliance, use it to create new value. You’re collecting all that new data, so use it!”
A real-time business is one that uses trusted, real-time data to enable people and systems to make real-time decisions, Peter Weill, the chairman of MIT’s Center for Information Systems Research (CISR), said at the “IFS Unleashed” show in Orlando.
By adopting that strategy, they gain three major capabilities, he said in a session titled “Becoming a Real-Time Business: Unlocking the Transformative Power of Digital, Data, and AI.” They are:
business model agility without needing a change management program to implement it
seamless digital customer journeys via self-service, automated, or assisted multi-product, multichannel experiences
thoughtful employee experiences enabled by technology empowered teams
And according to Weill, MIT’s studies show that adopting that real-time data stance is not restricted just to digital or tech-native businesses. Rather, it can produce successful results for companies in any sector that are able to apply the approach better than their immediate competitors.
However, that trend is counterbalanced by economic uncertainty driven by geopolitics, which is prompting many companies to diversity their supply chains, Dun & Bradstreet said in its “Q4 2024 Global Business Optimism Insights” report, which was based on research conducted during the third quarter.
“While overall global business optimism has increased and inflation has abated, it’s important to recognize that geopolitics contribute to economic uncertainty,” Neeraj Sahai, president of Dun & Bradstreet International, said in a release. “Industry-specific regulatory risks and more stringent data requirements have emerged as the top concerns among a third of respondents. To mitigate these risks, businesses are considering diversifying their supply chains and markets to manage regulatory risk.”
According to the report, nearly four in five businesses are expressing increased optimism in domestic and export orders, capital expenditures, and financial risk due to a combination of easing financial pressures, shifts in monetary policies, robust regulatory frameworks, and higher participation in sustainability initiatives.
U.S. businesses recorded a nearly 9% rise in optimism, aided by falling inflation and expectations of further rate cuts. Similarly, business optimism in the U.K. and Spain showed notable recoveries as their respective central banks initiated monetary easing, rising by 13% and 9%, respectively. Emerging economies, such as Argentina and India, saw jumps in optimism levels due to declining inflation and increased domestic demand respectively.
"Businesses are increasingly confident as borrowing costs decline, boosting optimism for higher sales, stronger exports, and reduced financial risks," Arun Singh, Global Chief Economist at Dun & Bradstreet, said. "This confidence is driving capital investments, with easing supply chain pressures supporting growth in the year's final quarter."