Retailers See Importance of Cross-Channel Inventory Management
by MarketingCharts staff
More than 85% of retailers say direct to consumer fulfillment will command a greater level of their attention in the future, as they aim to create a seamless customer experience regardless of channel, according to a Retail Industry Leaders Association (RILA) report [download page] released in March 2012. And although 63% of respondents to an RSR Research survey also released in March indicate that they have a single source of inventory that they can use to meet demand across any channel, only 10% of the RILA respondents strongly agreed that they had achieved a desired level of integration between their retail stores and direct-to-consumer fulfillment operations.
Retailers May Be Falsely Confident
Although the majority of respondents to the RSR survey say they have a single source of inventory across all channels, current direct-to-customer fulfillment strategies are used by relatively few. For example, only 40% of winners (those with comparable store/channel sales growth of over 6% in 2011) and 29% of others say they physically co-locate their direct channel’s inventory in a store, and only 35% of winners and 18% of others say they have a dedicated space for the inventory. In fact, only one-quarter of winners and 36% of their peers say they ship from stores, which RSR insight suggest seems somewhat optimistic given anecdotal evidence.
Consumer demands for the lowest price (68%) and the unpredictability of demand in an uncertain economy (68%) are the leading supply chain business challenges to retailers. After these leading challenges, there is a significant drop-off to others such as making sure the supply chain can keep up with demand (43%), uncertainty about variable supply chain costs (38%), and the network strain from cross-channel shoppers (29%).
36% of retailers agree that channel proliferation has caused them to re-think their buy-side strategies.
Lost sales from out of stocks, supply chain merchandising and merchandising management being in conflict, and past sales no longer being enough to predict future demand (all at 51%) are the biggest operational supply chain challenges to winners.
52% of winners cite their systems not adequately supporting cross-channel activity on the buying side as a top 3 organizational inhibitor.
The top supply chain technology adoption plan for retailers is cross-channel inventory optimization (30%).
According to the RILA report, more than 4 in 5 respondents plan to maintain or increase their spending levels on supply chain technologies.
About the Data: The RSR results are from a survey conducted online from November 2011 – February 2012, with responses from 103 qualified retail respondents. 33% of respondents were from companies with more than $1 billion in 2011 revenue.
Information for the RILA report was gathered via senior executive interviews and an online survey. A total of 199 retail supply chain executives took part in the research. Two-thirds were from companies with revenues exceeding $1 billion, and 68.3% were from a company with multi-channel operations. 72.9% were direct-level or above, with an average retail experience of 17.1 years.