Retailtopia - Building the omnichannel supply chain of the future 2013
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Retailtopia - Building
the omnichannel supply
chain of the future
2013
2013
Contents
Introduction to Retailtopia....................................................... 3
Foreword by the chairman....................................................... 4
Clear and present threats
1 / Acknowledge the pace of change........................................... 6
2 / Accept the supremacy of the customer.................................. 8
3 / Prepare for the knowledge explosion................................... 10
4 / Design an omnichannel supply chain................................... 12
Autonomous customer........................................................... 13
Priorities for action
5.1 / Improve leadership and understanding.................................16
5.2 / Design process with customer in mind .................................17
5.3 / Fix reverse logistics...............................................................19
5.4 / Recognise the potential of big data.............................................20
Summary.....................................................................................21
Afterword.....................................................................................23
2
2013
Introduction
Retailtopia brings together some of the best minds and practitioners from the
retail supply chain to consider the future of the industry.
The first Retailtopia panel in 2012 looked at how retailers could use technology
to improve the customer experience and drive growth. Retailtopia 2013 focuses
on how to build the retail supply chain for a customer-driven, omnichannel world.
The Retailtopia panel members met in London in February 2013, under the
chairmanship of Jim Spittle, FCILT, Chairman of GS1. Their insights and
recommendations are set out in this paper. Additional material, including video
interviews, is available online at www.bt.com/retailtopia.
Retailtopia panel members for 2013 are:
• Jim Spittle, FCILT, Retailtopia Chair and Chairman of GS1
• Neil Ashworth, FCILT, Chief Executive of Collect+, former Supply Chain
Director at Tesco.com and Woolworths
• Tom Barry, Managing Partner, H&B Europe
• Professor Alan Braithwaite, Chief Executive, LCPS
• Milton Guffogg, Chief Operation Officer, GA Europe
• Marcus Hickman, Director, Davies Hickman Partners
• Josh Pert, CEO, BT Expedite & Fresca
• Chris Poole, Global Customer Service Development Director, Diageo
• Gary Sharp, Vice President, UK Business Development, Retail Services
& Supply Chain, BT Global Services
• David Wild, non-executive director of Premier Foods and former Chief
Executive of Halfords
• Dean Wyatt, Vice President Business Development for Retail, DHL
Supply Chain
3
2013
Introduction
Retailtopia is the vision created by a series of thought leadership discussion
panels around the future of retail in the UK. It looks beyond the significant
short-term challenges facing the sector and seeks to create a positive view of
the future. This second Retailtopia vision paper was launched in March 2012.
This vision paper was written by Carol Gourlay, a business writer who attended
the Retailtopia panel discussion as an observer.
4
2013
Foreword
In 2012, 54 retailers ceased trading, one for every
week of the year. And at the time of writing, 2013
promises a similar toll. The UK economy continues
to be fragile and household budgets remain under
pressure. The challenges facing retailers are legion
and well-documented elsewhere. For this second
Retailtopia panel discussion, our focus is action,
not contemplation.
Last year, Retailtopia looked at how technology is changing the consumer
retail experience. This year, we focus particularly on the supply chain.
Widespread contamination of food products with horsemeat has highlighted
the vulnerability and complexity of today’s supply chains, and the need
for robust, reliable data. So how can we make our supply chains fit for an
omnichannel future where the all-seeing, all-knowing customer sets the
agenda? How do we move from the traditional B2C and B2B models to a more
complex C2B2B? While most retailers wholeheartedly support the vision of a
customer-focused, internally-aligned multichannel supply chain, it is clear that
many are struggling to make this a reality.
I am delighted that Retailtopia 2013 has such a diverse and experienced
panel, willing to share their experience and thinking. The members have all
been (and continue to be) highly influential and instrumental in shaping the
retail landscape of the UK today.
This document sets out the details of our thinking and recommendations but
I would like to underline two key points. The first is that transformation, not
transition, is the name of the game. And the second is a sense of urgency felt
by us all. The writing is on the wall: the time for action is now.
James Spittle, FCILT
Retailtopia Chair and Chairman of GS1
5
2013
Clear and
present threats
The Retailtopia panel identified four major threats to retailers. They are:
1. Acknowledge the pace of change
2. Accept the supremacy of the customer
3. Prepare for the knowledge explosion
4. Design an omnichannel supply chain
1. Acknowledge the pace of change
The attrition rate in UK retailing is ferocious. Fifty four retailers failed in 2012,
the worst year since 2008, affecting 48,000 employees and almost 4,000
stores1. So far, 2013 does not look much better. Six weeks into the year the
high street has already lost Blockbuster, Jessops and fashion retailer Republic,
plus many smaller local operators.
At the same time, online retail sales exceeded expectations for 2012, with
the IMRG Capgemini e-Retail Sales Index recording 17.5 per cent year-on-
year growth2. Retailers who already sell through multiple channels expect
their online and mobile sales to equate to 45 per cent of their total revenue
by 2014, while store sales will drop to below 40 per cent3. Even though total
retail spending will reach £377 billion by 2022, up 26 per cent on current
levels, overall store numbers are predicted to decline by 10 per cent by 20204.
As PricewaterhouseCoopers says: “Consumers are leading and shaping the
move to online, with retailers lagging behind.”5
The tough question is: do all boards really understand how fundamentally
retailing is changing? Arguably, some boards are comprised of members who
have only ever run a ‘bricks and mortar’ retail business. The economy and
depressed consumer spending are clearly factors in business failures, but
while early online sales were restricted to CDs, DVDs and books, now every
category of sector is open to online competition.
In spite of retailers claiming to ‘put customers at the heart of the business’,
nearly half of consumers regularly find that the product they want is not in
store – a figure that has not improved in six years6. Two thirds of consumers
say online shopping provides better value for money and a similar number say
they get a faster service7.
6
2013
Clear and
present threats
Online purchases accounted for a quarter of Christmas 2012 sales at John
Lewis8. Despite a successful Christmas, in February 2013 the company
announced a consultation on plans to “streamline management structures
in some of our established shops” by cutting 325 store manager jobs9. High
street fashion retailers now compete with pure online players such as ASOS,
whose magazine-style content and straightforward proposition (free delivery
worldwide with no minimum spend) give it five million customers and make it
the most visited fashion website on the planet (daily)10.
“This is as dramatic as the shift from silent films to talking pictures. Like the
hero of ‘The Artist’ who mocks the ‘talkies’ and finds himself marginalised,
retailers must learn to dance.” - David Wild, non-executive director at Premier
Foods and former CEO of Halfords
Traditional models and metrics no longer work. Big – especially as expressed
by a large number of stores – is no longer beautiful. Too many retailers
have too many stores. As the developer Hammerson says: “Some [retailers]
will need fewer physical stores than they used to and others may need
to rationalise their product offer. Others will need larger stores in the right
location. Retailers that do not review and change their business propositions
will be the ones that lose out”.11 Or, in the words of the Financial Times: “The
collapse of retailers such as Jessops, Comet and HMV, which all struggled to
adapt to the lower-cost online world, implies that the war on ‘zombies’
has begun.”12
“Retailers need to understand this is a fundamental structural change – you
can’t simply market your way out of this one.” - Tom Barry, Managing Partner,
H&B Europe
1
entre for Retail Research http://www.retailresearch.org/whosegonebust.php
C
2
http://www.imrg.org
3
www.imrg.org 27 November 2012
4
The Reshaping of Retail Hammerson, February 2013
5
http://www.pwc.co.uk/retail-consumer/issues/global-retailers-must-catch-up-with-multi-channel-consumers.jhtml
6
Autonomous Customer, Avaya & BT January 2013
7
7
Autonomous Customer, Avaya & BT January 2013
8
http://www.johnlewispresscentre.com/Press-Releases/John-Lewis-Christmas-trading-statement-five-weeks-to-29-December-2012-142f.aspx
9
www.ft.com 13 February 2013
10
http://www.asosplc.com/who-we-are
11
The Reshaping of Retail Hammerson, February 2013 http://www.hammerson.co.uk/phoenix.zhtml?c=133289&p=prol-news-article&ID=1783262&highlight=
12
www.ft.com, 15 January 2013
2013
Clear and
present threats
2. Accept the supremacy of the customer
Reflecting a collapse of trust in authority generally, consumers are turning their
backs on big brands. Less than a quarter trust the brand website13.
Increasingly, people prefer to get their information from each other, not the
brand or retailer, using social media and peer reviews to make a decision.
More than half of consumers (58 per cent) say they have got better help from
other consumers than call centre agents14. And self service is popular because
‘no-one tries to sell me anything’15.
“There may be a role for an independent broker, sitting between the retailer
and customer to aggregate and present information in a way that is both
accessible and perceived as trustworthy by consumers.” - Marcus Hickman,
Director, Davies Hickman Partners
Loyalty is history. Eighty five per cent always shop around to get the best
price. Customers rate online brands higher for service than the high street.
Whatever metrics you choose, digital brands and the experience delivered
by high performing online retailers have transformed customer expectations
at every level – not just price but also information, stock availability, delivery,
returns and post sales service.
Mobile technology means customers often have at their fingertips more up to
date pricing information than retailers, and can rapidly compare competitive
offerings. But too much information in store is incomplete or incorrect. In
consumer research by GS1 UK and Cranfield School of Management, 91
per cent of mobile barcode scans returned incorrect product descriptions
and 75 per cent returned no data at all16. Nearly 40 per cent of shoppers say
they would not buy a product if they could not trust the accuracy of the digital
information17.
8
2013
Clear and
present threats
Some brands are using technology to connect directly with consumers,
bypassing the retailer altogether. Examples include Diageo’s malt whisky
website and Mars’ M&M’s World stores. Such virtualisation will further erode
the traditional consumer-retailer relationship. Similarly, both Mars and Diageo
have introduced personalisation of mass market products. In the US, shoppers
can personalise and buy a bottle of Johnnie Walker Blue Label online for
Father’s Day. Once consumers get used to personalised products online, they
will inevitably expect them elsewhere.
“Consumers are asking themselves ‘how am I special to that retailer?’ and
companies are increasingly expected to respond to them as individuals, much
as in the old days of the corner shop.” - Josh Pert, CEO, BT Expedite & Fresca
9
13
Autonomous Customer, Avaya & BT January 2013
14
Autonomous Customer, Avaya & BT January 2013
15
Autonomous Customer, Avaya & BT January 2013
16
Mobile-savvy shopper report, GS1 UK and Cranfield School of Management, January 2011
17
Beyond the Label: Providing Digital Information Consumers Can Trust, GS1 and Capgemini 2011
2013
Clear and
present threats
3. Prepare for the knowledge explosion
No wonder they call it Big Data. In every minute of every day Google receives
more than 2,000,000 search queries, Facebook users share 684, 478 pieces
of content, Twitter users send over 100,000 tweets, brands and organisations
receive 34,722 ‘likes’ on Facebook and consumers spend $272,070 on
web shopping18.
According to McKinsey, the world’s data is doubling every two years19.
Businesses are largely underprepared for this expanding volume, velocity and
variety of data20 and it is unlikely that no one company will be able to manage
the deluge alone. Collaboration would enable brands and retailers to share
the costs and value of exploiting big data. And with the power requirements
of a new data centre now approaching those of a medium sized town, sharing
resources is a more environmentally responsible model. Standardisation must
underpin such collaborative data sharing.
“The next big thing in retail technology is not another smartphone but the
enormous amount of customer dialogue online. Companies who are able to
aggregate that and use it in supply chain planning will have enormous power.”
- Gary Sharp, Vice President, UK Business Development, Retail Services &
Supply Chain, BT Global Services
Retailers face a barrage of comment and contact via social media. Thirty
nine per cent of customers will actively comment on their retail experience on
Facebook and Twitter while shopping. According the BT & Avaya Autonomous
Customer research, fifty five per cent of consumers use social media to
interact with organisations. A large proportion of this is simply to get special
offers and vouchers, but almost 20 per cent make direct contact through
Twitter and Facebook. Clearly, organisations need strategies for dealing
with potentially thousands of direct messages from social media as well as
monitoring for wider issues. Milk Tray and Twinings are just two of many
brands to have been lashed by consumers via social media as a result of a
recipe change.
102013
Clear and
present threats
Retailers are much better now at getting a single view of the customer. If they
could add what they know to information extracted from more unstructured
online content, then there is the potential to predict what, where and when
someone might buy. And then connect that information with location-based
services to attract consumers with vouchers and special offers.
11
18
http://www.domo.com/learn/7/236#videos-and-infographics
19
Big data:The next frontier for innovation, competition, and productivity McKinsey Global Institute 2011
20
From Stretched to Strengthened, Insights from the Global Chief Marketing Officer Study IBM 20112013
Clear and
present threats
4. Design an omnichannel supply chain
A real obstacle to redesigning the supply chain for omnichannel sales is
internal collaboration – or the lack of it. The supply chain is not always at the
table where big decisions are taken.
“Planning is key: there is not enough emphasis on planning, too much reliance
on history and ‘how can I sell you what I have now!” - Dean Wyatt, VP for
Business Development for Retail, DHL Supply Chain
According to the Retailtopia panel, buying and merchandising are often seen
as the ‘premier league’ while supply chain is the ‘championship’. Buying and
merchandising teams should understand they are a core part of the process
and their decisions impact underlying profitability. Retailers need to understand
that buying and merchandising are core supply chain functions and bring them
into a more transparent, cross-functional process, develop a more ‘federated’
capability’. For some, this may require a significant change in culture, such
as measuring the performance of individual departments at every step of the
supply chain.
“The biggest challenge around collaboration is internal. Much greater
collaboration, with information transparency and cross-channel connectivity
across the business, is a pre-requisite to building an effective omnichannel
supply chain.” - Jim Spittle, FCILT, Retailtopia Chair and Chairman of GS1
Collaboration is the principle behind much supply chain good practice. But
how far to collaborate? High street retailers could make real savings by
collaborating on mainstream delivery and replenishment. One lorry rather
than several cuts delivery costs all round, as well as reducing CO2 emissions.
The customer does not care whose vehicle delivers what and where. But
while it might be desirable to collaborate in this way, if the current battle of the
brands for customer mindshare prevails and the supply chain is a competitive
advantage for the retailer, then extensive collaboration is unlikely.
“Stores will be showrooms. People will buy online” - Milton Guffogg, COO,
GA Europe
122013
Clear and
present threats
If delivery options and costs are not clear at the beginning of the buying
process, many consumers will go no further. Retailers need to be able to offer
a whole mix of ordering and delivery choices. ‘Click and collect’ overcomes the
problems associated with home delivery, when people are not always in. John
Lewis lets customers order online and collect from their local Waitrose stores;
Amazon offers collection (and returns) via Collect+ and its own secure lockers;
Argos’ ‘check and reserve’ online service now accounts for almost a third of its
sales and is the company’s fastest growing channel21. However, less than half
of the UK’s top sellers currently offer a click-and-collect service22.
Smart retailers use the footfall generated by ‘click and collect’ as an
opportunity to connect with the customer. Halfords lets customers order a
new bike online and then collect it, ready assembled, from a local store. This
approach guarantees a face-to-face encounter with the customer, both an
opportunity to check that the customer is happy with the purchase (and so
reduce the rate of returns) and to sell additional equipment or accessories.
The majority (87 per cent) of Halfords online orders are collected in store.
“There is a lot of strong collaboration but to be effective we need a change in
mindset so we can deliver excellence at the point of purchase. In other words,
what changes can we make so that we ensure this product is fit for purpose
at every point of the supply chain?” – Chris Poole, Global Customer Service
Development Director, Diageo plc
Returns is a classic supply chain process that touches all parts of the
business. During the boom years, retailers did not have to worry so much
about reverse logistics. Now, Cranfield research suggests that the value of
retail returns in the UK is currently running at £6 billion annually23. No longer
is the returns process an afterthought but a key component of the retailer’s
proposition and an influential factor in the consumer’s decision-making.
Online retailers can expect return levels as high as 30 per cent24, especially
in fashion, because shoppers buy several sizes to try on at home and keep
only what fits. The cost of returning unwanted clothing to UK fashion retailers
was £91 million in 2011, £61.5 million of which was borne by retailer25. And
post Christmas, returns for goods bought online can be up to 40 per cent for
clothing and between five and ten per cent for electrical goods26. How well the
organisation manages this high volume of returns is a commercial imperative
that requires cross-functional review, measurement and management.
132013
Clear and
present threats
Three quarters of consumers want to choose where and how to return
products27. Digital channels have given consumers much more choice about
how to take delivery of a product and now they want the same choice for
returns, including BORIS (Buy Online Return In Store), a brother to ‘click and
collect’ (and a better alternative than ‘post and pray’).
A good omnichannel supply chain treats returns as another supplier. In a
multichannel world, the customer is no longer the end point of the supply
chain but another link that needs to seamlessly fit into the bigger picture.
The cost of handling a return can be two or three times the cost of executing
the outbound process, but a well executed returns strategy can put two per
cent on the margin.
Fixing returns also has a big part to play in addressing sustainability and
environmental issues around transport, packaging, waste and recycling.
A sound process for handling returns will help retailers and manufacturers
comply with the WEEE (Waste Electrical and Electronic Equipment) directive
and other statutory requirements designed to minimise waste.
“Some retailers burn more in waste than the entire operational cost of their
supply chain.” - Professor Alan Braithwaite, CEO, LCPS
21
www.homeretailgroup.com press release 30.11.12
14
22
http://www.ivisgroup.com/ivis/mycustomer-nearly-half-of-top-retailers-dont-offer
23
http://www.som.cranfield.ac.uk/som/dinamic-content/news/documents/manfocus31/Managing%20the%20Retail%20Return%20Nightmare-Hi%20Res.pdf
24
http://www.som.cranfield.ac.uk/som/dinamic-content/news/documents/manfocus31/Managing%20the%20Retail%20Return%20Nightmare-Hi%20Res.pdf
25
http://webloyalty.co.uk/news-a-research/32-press-releases-2012/100-returns-cost-fashion-retailers-p6152-million-per-year
26
http://www.guardian.co.uk/business/2013/jan/03/gift-returns-christmas-retail-figures
27
Autonomous Customer, Avaya & BT January 20132013
Autonomous Customer
The Autonomous Customer – highlights of research findings
In 2013, BT and Avaya sponsored an independent research study to examine
the degree to which customers were becoming autonomous in their shopping
behaviour. Some highlights of this research were shared with the Retailtopia
panel and you will find them referenced at various points in this paper.
The research revealed that online brands have transformed consumers’
expectations of value and service. Online shopping has always offered low
prices, and now 66 per cent of consumers say online provides a faster service
as well.
Internet shopping has other advantages over the high street. For example,
47 per cent of consumers often find products out of stock in shops – a figure
that has remained constant since 2010. What’s more, shoppers find ‘too much
selling’ in bricks and mortar stores; 63 per cent prefer shopping online because
no one tries to sell them anything.
Other findings include:
• 97 per cent would like to be able to order in store out of stock items for
home delivery.
• 85 per cent say they always shop around to get the best prices and one in
three says convenience is more important than price.
• 52 per cent download online vouchers.
• Only 17 per cent say organisations make it easy to switch between
different channels.
• 74 per cent want to choose where/how to return products.
• Three out of four people are suspicious about the data companies collect
from website visits.
• 60 per cent say the more information they give, the better customer service
they expect in return.
The Autonomous Customer study was completed in the UK and US in
January 2013 and used a representative sample of online consumers in the
two countries.
152013
Priorities for action
The Retailtopis panel identified four priorities for action by retailers. They are:
1. Improve leadership and understanding
2. Design process with customer in mind
3. Fix reverse logistics
4. Recognise the potential of big data - action for the longer term
5.1 Improve leadership and understanding
• Get a board that understands the reality of omnichannel consumer
demands - and provides leadership. Failing retailers are those who behave
like rabbits caught in the headlights. They know what is coming but are
unable to respond and move direction before being flattened by the ‘digital
juggernaut.’
• Analyse forensically your cost to serve. Understand your whole supply
chain costs. According to PricewaterhouseCoopers, companies that focus
on improving their supply chain performance consistently outperform their
peers financially28.
• Develop more internal collaboration between buying or merchandising and
supply chain functions. Put them in the same room to talk.
• Agree new metrics for new models. Find new measures such as ‘returns
by stock keeping unit (SKU)’. The established industry metric is that 90
per cent of incoming customer telephone calls should be answered in 20
seconds. Online needs new metrics, but customers can tell you what they
should be. For example, 72 per cent want their emails answered in three
hours and 34 per cent expect a response within 15 minutes to a tweet or
Facebook posting.
“The board needs to take a quantum leap, small steps are not enough. Be
radical, be creative. Understand your customer. Embrace technology. Do it
now.” - Milton Guffogg, COO, GA Europe
“We are moving from a high capitalisation, high margin environment to a low
capitalisation, low margin environment, yet boards are still clinging on to
the old KPIs, such as sales per square foot.” - Neil Ashworth, FCILT, Chief
Executive of Collect+ and former Supply Chain Director at Tesco.com
and Woolworths
28
Next-generation supply chains: Efficient, fast and tailored PWC, 2012
162013
Priorities for action
5.2 Design the whole supply chain with the customer in mind
• Manufacture, ship, sell, deliver and service a product that is fit for every
point in supply chain and the end point of use.
• Find a new model that works and then value engineer the cost down.
John Lewis’s distribution centre in Milton Keynes fulfils both store and
online orders.
• Work out how and where personalisation fits into your business.
• Keep up with new technologies. The arrival of 3D printing will transform
manufacturing. Why keep a stock of washers when you can manufacture
them to demand?
• Think again about collaboration with a like-minded retailer. The greatest
benefits come when similar businesses share resources. As long as your
data is secure, it doesn’t matter which trucks and warehouses process
your goods.
• Make your customers part of your supply chain. Give them the best value
and most convenient experience before, during and after sale. Make sure
information customers give you in one place (via the website or in store)
is also available in another (the call centre or mobile app). Introduce
videoconferencing and webchat.
• Make your inventory available for sale wherever it is located. This can reduce
markdown, increase full value sales and increase customer satisfaction.
“Retailers have got to be more cost-effective. They could learn from the mail
order companies who have been doing it for years and whose unit cost would
shame most retailers.” - Professor Alan Braithwaite, CEO, LCPS
“We need customer experience solutions, not more ways to move boxes
around” - Josh Pert, CEO, BT Expedite & Fresca
172013
Priorities for action
What are consumers looking for from their customer contact experience?
CALL CENTRES SMARTPHONES
84% Phone number is free 48% Text are replied to within
one hour
80% Told how long they will
need to wait in call queue 38% No more than 3 ‘push
notifications’ from an App
78% Call answered in 20
each month
seconds
Can contact an org
55% Call centre agent knows
32% directly through
what internet page I’m on
smartphone App
INTERNET SELF
SERVICE SOCIAL MEDIA
59% Web chat support is
34% Receive a response
near instant within 15 minutes through
37% One-way video chat social media sites (i.e.
is available to contact Facebook/Twitter)
organisations
72% Emails are replied to ONLINE COMMUNITY
within 3 hours SCHEME
47% Easily join an online
SHOPS community
63% No more than 3 people
in a shop queue to buy
something
Source: Autonomous Customer 2013 (see p 15).
182013
Priorities for action
5.3 Fix reverse logistics
• Apply the same principles to reverse logistics as forward logistics. Just in
time at the least cost. Treat returns like a supplier, not a logistics process.
• Design the right returns strategy for your business. This should be a
collaborative effort, not left to the marketing department. A returns policy
should be appropriate, fair and consistent. Understand what it costs.
• Give customers all the information they and you need to process the return
quickly. Recognise that every time they return the goods to the store is a
conversion opportunity.
• Let customers have their money back quickly. Cycling and tri-sports
retailer Wiggle has a 365 day returns policy and customers can return
products free of charge via Collect+. But what works for one business may
be over-generous in another.
• Measure returns by SKU. If you apply customer review scorecards to
returns you will get a good indicator of why goods are being returned. And
then do something about it.
• Write down returns aggressively. That means as much as 25 per cent
at the point of receipt. Accountants tend to overvalue returns. Think of it
as cash.
• Remember that returns are not necessarily waste. Up to 85 per cent of
all returned products can be refurbished and remarketed rather than sent
to landfill29.
“No-one ever talks about reverse logistics with the same eloquence as forward
logistics.” - Tom Barry, Managing Partner, H&B Europe
29
http://www.imrg.org/ImrgWebsite/User/Pages/PressReleases.aspx?pageID=85&parentPageID=0&itemID=7360&pageTemplate=7&isHomePage=false&isD
etailData=true&specificPageType=3
192013
Priorities for action
5.4 Recognise the potential of big data
• Understand the value of information in online customer dialogue. No-
one at the moment has the capacity to ‘drink from the fire hose’ but it
is important to appreciate what the big data era means for retailing.
Widespread deployment of GPS and RFID will make the ‘Internet of
Things’ a reality, opening up the possibility for brands and retailers to
monitor how consumers use products and use that information for product
improvement or service enhancements.
• Consider what it would mean to make plans based on what people are
saying and doing now, and not rely on historic data. Customers start
researching seasonal purchases online a couple of months before they
buy. So that means aligning marketing with digital channels separately
from in store.
• Acknowledge that hardly anyone has the resources to manipulate vast
amounts of unstructured data but that it might be an opportunity to
collaborate. Open standards and event capture technology enables all
partners to securely collect, share and interpret high volume granular
information (SKU level) about the movement and status of goods and
assets as they move through the supply chain.
• Support data standards. The more standardised data is across the
supply chain, the easier it will be for all partners to share and understand.
According to Forrester Research, “the process of data exchange today is
so error-prone that, on average, 30 per cent of product data is incorrect
across the supply chain”30.
“Supply chain planning has typically used historic data as an indicator of the
future - planning by hindsight. We are now entering a stage where we can look
at what is happening now to create insight and allow us to create the future
based on foresight.” - Neil Ashworth, Chief Executive of Collect+ and former
Supply Chain Director at Tesco.com and Woolworths
30
Use New Supply Chain Visibility Technologies To Improve Customer Service And Return On Assets Forrester Research 2012
202013
Summary
Clear and present threats
1. Acknowledge the pace of change
In creating the omnicomchannel world, consumers have already made their
choice about how they want to shop.
2. Accept the supremacy of the customer
Consumers trust each other more than the retailer or brand. And they often
have better information as well.
3. Prepare for the knowledge explosion
We are creating new data at an astonishing rate. The ubiquity of mobile devices
and the emerging ‘Internet of Things’ will further add to the deluge.
4. Design an omnichannel supply chain
There is no omnichannel supply chain without omnichannel, omni-collaboration
inside your organisation.
212013
Summary
Priorities for action
1 Improve leadership and understanding
Every board must understand and accept the scale of change underway.
Deliver the transformation required to remain competitive.
2 Design process with customer in mind
Manufacture, ship, sell, deliver and service a product that is fit for every point in
supply chain and the end point of use. Measure what matters to customers.
3 Fix reverse logistics
Apply to returns the same standards of good practice, investment and discipline
as are applied to forward logistics.
4 Recognise the potential of big data - action for the longer term
Keep abreast of new ideas and thinking about how to manage big data.
Support open standards and sharing data with supply chain partners.
222013
Afterword
No-one has yet created a truly omnichannel supply chain. However, there are
plenty of examples of enlightened, imaginative and joined-up thinking from
some well established high street names; innovation is not restricted to
online brands.
Worryingly, too many retailers still underestimate the need for a radical rethink
of traditional supply chain practices and models. Boardroom complacency
and lethargy are dangers as significant as any of the other threats we have
discussed in this paper.
We would urge all retailers to put the future of their supply chain at the top of
the boardroom agenda. This is not a time for piecemeal changes but, as one
of my colleagues says elsewhere in this document, time for a quantum leap.
In expressing their desire for the benefits of an omnichannel world, consumers
have made it abundantly clear what they expect of retail. It is time now for all
of us involved in retailing to make sure we can meet their demands and shape
our industry for success in the 21st century.
Jim Spittle FCILT, Retailtopia Chair and Chairman of GS1
To find out more about Retailtopia, visit: www.bt.com/retailtopia.
232013 Created in March 2013
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