How will retail change and develop in 2019? We hear from industry insiders and share their predictions for the year ahead. This ongoing series focuses on a different theme each time, and today we’re looking at operations and logistics, from the supply chain to delivery and returns – and at a time when it’s become more clear that the delivery promise makes a significant difference for consumers deciding where to buy.
Shoppers will no longer pay for delivery and returns
Andrew Westbrook, head of retail at business advisers RSM
Consumers have become more discerning than ever and with many focussing on cost, paying for delivery is no longer an option. Consumers will choose to buy products from retailers who offer free delivery and returns or purchase more than they need to, to hit the minimum spend, with the intention of returning these extra products. WSJ placed brick-and-mortar return rates around 8-10 per cent, online it’s more than double that at 20 per cent. For retailers, deliveries can be a logistical, cash flow and stock nightmare and this is a key area to be streamlined. Many will look to digital solutions to solve the problem. Those who don’t will miss out on consumer spend which will be diverted to those that do.
Same-day delivery will start to become the new normal
Derek O’Carroll, chief executive, omnichannel platform business Brightpearl
Some are predicting that 65% of retailers will offer same-day delivery by the end of next year. We’ve certainly come a long way since 1995, when consumers, on average, thought an acceptable delivery time was nine days (yes, nine!). In 2018, it’s a mere 24 hours. And customer expectations are about to change again – same-day delivery will be the new normal within 18 months. However, 59% of shoppers in the last year have experienced goods not arriving on time. If your business isn’t able to deliver on current delivery expectations, how are you supposed to cope when the timeline shortens again? You won’t.
Many retailers do not have the right systems in place to meet this level of service. This could be a major differentiator for retailers next year and many will have to innovate or fall further behind their competitors. Heading into 2019, those retailers who do step up and give serious thought to retooling how they invest and operate their supply chain are most likely to remain competitive.
More local distribution centres will open
Wayne Snyder, VP retail industry strategy EMEA at supply chain software business JDA
As consumer expectations continue to rise with home delivery, we will start to see an increase in smaller and more local distribution centres. Collaboration between retailers will become increasingly common as a result, leading to faster and more accurate deliveries for consumers. This progress will in turn drive consumer expectations forward, so people will begin to expect the ability to track their orders in real-time.
Retailers will improve the returns experience
Amit Sharma, founder and chief executive of post-purchase specialist Narvar
It’s become especially challenging to retain customers in this new era where convenience reigns supreme and retail has been somewhat commoditised. The returns experience is one area that continues to stand out as a potential advantage to gain consumer trust and loyalty. The data speaks for itself—96% of consumers would shop with a retailer again based on a positive returns experience. In the next year, I expect the focus on post-purchase to intensify, as retailers are aware they can’t ignore this pivotal part of the shopping journey anymore. I expect retailers to overhaul their existing returns programs and offer proactive notifications about refund status and return tracking, as well as providing more flexible pickup and return options across all channels.
Greater use of automation in the supply chain
David Nicholls, retail and hospitality CTO at technology company Fujitsu UK
We expect more and more retailers to experiment with robotic process automation (RPA) to explore its potential, driven by a need to improve accuracy, processes, productivity and product availability. We will see retailers embrace automation more widely across the supply chain and within the store to cost effectively manage the movement, control and availability of product both within the store and to the customer.