Omni-channel retailing creates new challenges for supply chain managers

A new report by Capgemini Consulting reveals industry views about the rapidly evolving retail landscape, including business challenges and opportunities.
The report is titled Are You Ready? How to Create an Always-On, Always-Open Shopping Experience.

The consulting unit of the Capgemini Group, and GS1 US – the information standards organization – surveyed apparel and general merchandise retail leaders, whose companies represent nearly $500 billion in U.S. sales. Interviews were conducted in person and over the phone.

Top findings show that omni-channel retailing, which provides customers with a consistent research, shopping, purchasing and fulfillment experience regardless of channel, lies at the heart of many retailer transformation efforts. Additionally, mobile shopping, same-day delivery, and growing volumes of data from online channels are forcing retailers to a tipping point to remain competitive and better respond to evolving customer needs and preferences.

“Retailers are transforming their organizations and market approaches to leverage the power of digital and satisfy the needs of the ever-changing consumer,” says Dan Albright, Senior Vice President, Capgemini Consulting. “The digital transformation journey to omni-channel is multi-faceted and requires retailers to reevaluate every aspect of how they serve the market. Leading retailers have already taken significant steps in their omni-channel journey, but there are still many objectives that must be met to continue building on recent progress. As the report reveals, the imperative for 2014 and beyond is to keep the strategy moving forward by enabling an agile infrastructure and greater inventory visibility to seamlessly serve consumers when, where, and how they shop.”

Belinda Griffin, senior manager at Capgemini, notes in an interview that supply chain collaboration and supply chain execution convergence are also keeping pace with this trend.

“It focuses on making better live execution-related decisions,” she says, “but also encompasses forward looking planning and forecasting activities.”

The results of the survey reveal four critical components required to help drive a successful omni-channel strategy:
1.   Inventory Visibility – Inventory identification, tracking and management are the core competencies that matter most in omni-channel retailing. Supply chain visibility and inventory accuracy are foundational requirements for effective omni-channel operations and to allow the retailer to know where its inventory is at all times. New standards such as Electronic Product Code (EPC)-enabled Radio Frequency Identification (RFID) are enabling leading retailers to drive pinpoint precision in their inventory accuracy in real-time;
2.   Web-Ready Products – Making products “web-ready” is an important component of a successful omni-channel retail operation, but is currently a bottleneck for many retailers. Key product information, attributes and images are not always accurate, standardized or readily available for retailers or their trading partners. However, emerging standards in this area can provide the foundation for identifying, capturing and sharing product data, providing the industry with the opportunity to collaborate on bringing products to the online marketplace faster;
3.   Predictive Customer Analytics – Consumers are increasingly sharing valuable information through social data, product reviews, and online visits and purchases. Leading retailers are using predictive analytics to gain deeper insight into customer behaviors, trends and the forces of loyalty and purchase. Retailers that take advantage of sophisticated algorithms and data-mining activities—which analyze current social data, product reviews and historical facts to track shopping patterns—have a greater ability to create an individual shopping experience based on rich information sources; and
4.   Fulfillment Strategy – Fulfillment options need to be robust and varied for today’s “always-on, always-open” shoppers. Retailers are focused on building in-store, web-store and direct-to-consumer options and many are leveraging existing and new infrastructure in creative ways. By using their storefront locations as distribution centers, retailers are better positioned to deliver products quickly to the customer. Standards-based technology such as EPC-enabled RFID will be critical in providing the requisite level of visibility to make this a reality

“While retailers recognize the importance of the core components of a solid omni-channel strategy, many struggle with meshing them together and developing a high-level, integrated approach that can deliver quality experiences to satisfy today’s consumers and edge out the competition,” says Melanie Nuce, Vice President of Apparel and General Merchandise, GS1 US. “The industry needs to respond to strong demand for omni-channel capabilities and adopt common standards to drive the seamless integration of these key components.”

For more information or to download the full report, please click here.