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Developing the Multichannel Store

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Developing the Multichannel Store
Developing the Multichannel Store
WITH STORES NOW PLAYING A SIGNIFICANT ROLE IN THE MULTICHANNEL FULFILMENT PROCESS NEW STAFF SKILLS AND SYSTEMS ARE ON THE AGENDA TO DELIVER THE IDEAL CUSTOMER EXPERIENCE SAYS PENELOPE ODY.

In today’s multichannel world, stores are more than just emporia for browsing and buying. The theatre and excitement of traditional retailing may still be there, but stores are also an increasingly important part of the supply chain: mini-warehouses for individual order picking, packing for despatch and collection points for online orders. They’re also components of the fully integrated and visible single stock pool in the ‘anywhere, everywhere’ shopping model central to omnichannel retailing.

It all adds up to challenging times for both systems and store staff. Maintaining accurate store inventory records in real time is almost impossible for many retailers, while staff must not only be good at customer interaction and selling, but they must also become efficient at distribution: preparing parcels for ship from store or locating goods for collection in record time.

“The store is key in multichannel,” says Sarah Taylor, senior director, retail at Oracle. “Store staff add value to the interaction but they need the knowledge to support that interaction so they have to have access to the supply process: customer order information, ecommerce products, inventory across the chain and so on.”

AFTER THE MONEY’S BEEN TAKEN

While store staff may be expert at selling, they also need a positive approach to after-sales service – especially where they’ve not been involved in the actual sale. “Research shows that positive brand advocacy is driven disproportionately by the after-sales experience,” says Steve Leng, retail merchandising and supply-chain solutions leader for UK and Ireland with IBM, “so a good in-store experience relating to fulfilment and supply chain is vital. The retailer has to think of stores in a different way and needs to manage them as part of the distribution centre.”

Memories of a slick and efficient online experience are soon forgotten if on arrival at the store the sales assistant takes 15 minutes or more to actually find the goods for collection or – worse still – can only apologise because the shop is actually out of stock and the website should never have suggested collecting them from that outlet in the first place.

Accurate store stock information is obviously essential for same day or 90-minute despatch or collection models, so it is not surprising that many retailers opt instead for next-day collection with goods despatched from the distribution centre overnight. It is a major growth area for many logistics companies. “Our in-night service is growing rapidly because of click and collect,” says Wayne Parrott, partnership director for Royal Mail’s Relay operation, “and we’re also starting same-day deliveries in the London area.” Theatrical costumier, Angel, is an early customer with party goers able to order their online fancy dress by 2pm for delivery to their home that evening between 6.00pm and 9.30pm.

Overnight fulfilment for click and collect at least means that the goods are available in-store for collection – although actually finding them can still be challenging. In small fashion outlets a rail behind the till-point with labelled hanging garments can be sufficient – as long as other shoppers don’t start asking to try on these seemingly spare items. For low-volume retailers handling collection from the till point can be viable, but as orders grow a separate collection point – clearly signposted for shoppers – becomes an essential and potentially expensive addition.

“Click and collect can take up back-office space, so can limit other activities and be a burden,” says Alek Adamski, partner with Kurt Salmon. “There are also increased staff costs as collection tends to be random and less predictable than normal store activities. Obviously you have a lunch-time and after-work peak, but collection occurs at other times and keeping the collection desk staffed throughout the day is an expense.”

MINI-WAREHOUSE APPLICATIONS

While valuable back-office space must be devoted to labelled shelving or lockers where items can be stored by name or collection time, IT vendors can help with ‘mini-warehouse’ applications that can link to order management systems, handle in-store picking, and provide an easy reference to precise item location. “We have around 3,000 stores in the US using our Store Commerce system,” says Craig Sears-Black, UK managing director at Manhattan Associates, “and interest is growing in the UK. Goods handling in store can be complex and requires new disciplines for picking, packing, labelling, arranging couriers and so on – and a lot of things can go wrong. Staff need training and motivation with good store communications and process change.”

With click and collect already starting to outstrip home delivery for some retailers, finding space and staff to manage the system efficiently can be a problem. “Some of our retail customers are reporting up to 80 per cent of their online orders now going via click and collect,” says Jason Shorrock, product director at BT Expedite, “and many we’ve worked with have drastically under-estimated the scale of demand.”

“We’re starting to see more real-time task management systems used in-store to manage click and collect,” says Daniel Bagge, retail multichannel and supply-chain business solutions leader with IBM. “If a customer has specified a collection time, for example, then you can use mobile systems to alert staff that the goods need to be ready.”

Equally, he says, by using proximity geolocation and customer recognition for registered smartphones, shoppers entering the store can be identified and alerts sent to staff mobiles of the imminent need for collection.

Customers, too, could benefit, suggests James Lovell, Smarter Commerce solution consultant Europe at IBM. “A customer could have an app which not only identifies them to the store but could display a location map directing them to the collection point as well. Every retailer we talk to currently is looking at mobile as part of the store experience and suitable apps can trigger staff engagement as well as help customers.”

RESERVE AND COLLECT

As well as click and collect, reserve and collect – that is, pay in store – is also on the increase and, as Jason Shorrock points out, this brings additional problems: “Not all goods sent to the store will be collected – one of our retail customers suggests that applies to a third of its reserve-and-collect orders.” To a lesser extent the same is true of click and collect with distance selling rules ensuring automatic refunds for the shopper.

How long a retailer keeps the reserved item on standby varies with some stipulating a 24-hour limit while others will keep goods available for up to a couple of weeks. It’s another area where staff training and process discipline can be important: will shoppers be contacted after 24 hours to check if they still want the goods, for example, or are the items simply returned to stock or sent back to the DC? And how do staff cope with the irate customer arriving a day late to find her goods no longer available?

For those retailers who have achieved real-time inventory accuracy and can offer fulfilment from any location, ship from store also brings its challenges. Boxes and bubble-wrap take up rather more space than plastic bags and online shoppers are accustomed to receiving perfectly packaged consignments. Ensuring brand consistency in parcels sent from multiple locations can be yet another process issue.

“As well as the actual packaging, there is staff time to consider,” says Scott Slinn, head of supply-chain solutions at BT Expedite. “Do they have to call a courier or walk down the road to the Post Office? For many retailers returning stock to the DC to be packed and shipped is seen as a simpler and more consistent solution.”

Return logistics also brings its headaches. Shoppers may take their parcels to a Collect+ point to be sent back to the DC, deliver them back to the store where they were collected, or simply drop them into the nearest outlet.

“We have had a customer who returned a sofa to the nearest Waitrose [irdx rwai],” recalls Dino Rocos, operations director at John Lewis [irdx rjlw]. “The store assistant obviously accepted the return and the customer was happy, but then we had to work out how to get the thing back into stock.”

Online shoppers are increasingly ordering fashion items online in several sizes and then returning the ones which don’t fit, so helping to boost returns rates for many multichannel retailers to 40 per cent or more. Returning the goods to a nearby store is obviously easier for many than queuing at the post office so, as with collection, a quick and efficient process for handling them in-store is important.

THE NEED FOR SPEED

“Retailers need to encourage shoppers to return goods quickly,” says Alison Wiltshire, global retail propositions director with BT Global Services, “especially where fashion items are concerned so that they are still in season – but they don’t all make it easy. At Marks & Spencer [irdx rmas], for example, the returns desk is always on the highest level of the store in a remote corner. In the US, stores put the returns desk right by the front entrance which greatly improves the customer experience. Selfridges [irdx rsel] has its click-and-collect counter by the lift from the car park, which is ideal.”

For many retailers, making the shopper walk through the store to find the service counter is seen as an important tactic for encouraging impulse buys as they pass strategically sited displays en route: that may encourage the occasional sale but can have a detrimental effect on customer experience.

Oracle’s survey for its recent Evolution of Experience Retailing study highlighted the importance of easy returns with 54 per cent of the UK shoppers questioned citing a simple returns policy as a key factor in delivering good service. “Consumers want a good returns experience integrated across channels,” says Sarah Taylor, “while retailers need systems to allow them to add those returned goods back into the inventory pool quickly.”

Consumers questioned for the Oracle study also rated flexible delivery options and product availability at the point of purchase as important service attributes, while store staff were seen as the most significant proponents of bad service, followed by poor fulfilment. Almost two-thirds of those questioned would expect some form of refund or compensation gift and be prepared to complain if service levels failed to live up to expectation.

Delivering that excellent fulfilment experience in-store will clearly be difficult for many retailers bringing as it does the need for additional staff for service desks, well organised warehousing back of store, and suitable IT dashboards for staff to manage tasks, stocks and customer records. Challenging certainly, but ultimately a great deal more cost effective than providing free home delivery.

SPEAKING FROM EXPERIENCE

The last nine yards

We’re seeing online revenues increase by as much as 50 per cent when retailers introduce click and collect, but as always in supply chain it is the last nine yards that causes the problems and it’s the same with click and collect. Customers don’t want to wait for half an hour while the sales assistant searches for the goods.

Daniel Bagge, retail multichannel and supply-chain business solutions leader, IBM

Convenience is key

Customers want convenience in how their orders are fulfilled. We’re seeing 90-minute deliveries, eBay orders collected at Argos, and shopping malls developing single collection points for multiple retailers, for example, so retailers need to think about how they can service these new and emerging options.”

Jason Shorrock, product director, BT Expedite

One clear view

Customers want transparency – they want to see what products are available, when they can be delivered, where the items have come from, what is the source and so on. So there has to be a single view of all this supply-chain information which is available both to store associates and customers. Having that information can help improve the in-store experience.”

Sarah Taylor, senior director, retail, Oracle
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