Craig Summers, UK Managing Director, Manhattan Associates, examines why the supply chain and customer experience are intrinsically linked.
The following guest article has been written for InternetRetailing by Craig Summers, UK Managing Director, Manhattan Associates. Manhattan Associates is a technology leader in supply chain and omnichannel commerce. We unite information across the enterprise, converging front-end sales with back-end supply chain execution. Its software, platform technology and unmatched experience help drive both top-line growth and bottom-line profitability for its customers.
Retailers are continuing to invest in the customer experience. From new stores and attractive websites to new product ranges and value-adding service concepts, the front-end has had its fair share of development over the years. Does this mean, retailers are now confidently providing an omnichannel experience?
Not quite. It might come as a surprise that many are still struggling to get to grips with giving their customers a truly seamless omnichannel experience. And it’s because they are not putting the supply chain at the heart of the business.
It’s not just about the front-end; it’s about the seamless back-end processes that retailers use to navigate inventory, customers and returns through the entire infrastructure. A true omnichannel experience begins in the supply chain and visibility is key in ensuring the customer receives a connected experience, regardless of whether they are shopping in store or online. A change in mindset is needed which sees retailers positioning the supply chain at the heart of the business.
After all, if the supply chain is to drive real profitability and customer connections, it needs to be the backbone to not only stores and ecommerce, but also to the customer experience itself.
Retailers need to shift their thinking away from omnichannel, focusing on the customer experience as a whole and maintaining an agile supply chain. You cannot build a house to stand the test of time if the foundations are unstable; the customer experience should start in the supply chain to ensure survival.
After a decade of omnichannel retailing, it should not be news to retailers that customers are buying from a brand, not a channel. They expect their basket to be replicated across devices, they expect to receive relevant recommendations and they certainly expect prices to be the same both in store and online. Yet retailers are persisting with channel specific policies that are undermining the customer experience and jeopardising brand perception.
First and foremost, retailers need to accept that their customers are channel blind – they just want a good retail experience. If they have a positive experience, they won’t leave feedback stating they just had ‘a great omnichannel experience.’ But retailers are continuously persisting with fragmented strategies that damage consumer experiences and harm loyalty.
How, for example, can any retailer justify an ‘online only’ price when it also has bricks and mortar stores? Just consider the experience endured by the customer who has seen a price online but prefers to pop into the nearest store, only to discover the price is 20% higher. The retailer generously offering to ‘price match’ its own website – only when the difference is pointed out by a somewhat miffed customer - is a clear example of the way omnichannel retail strategies are damaging customer perception and experience.
Fragmenting the retail experience has only one outcome: it devalues the experience and that retail brand for the customer. Without loyalty or respect, customers will simply escalate those behaviours that fundamentally undermine retail profitability. Buying only on discount and increasing returns is devastating retail performance – and, to an extent, it is retailers’ inability to provide a consistent, end to end experience that is contributing to this behaviour. Customers may behave in an omnichannel fashion – checking prices via their mobile while standing in store, for example; but they don’t think channel, and they certainly don’t think omnichannel.
In today’s retail environment, it’s difficult to ignore the main drivers of change. Customer expectations have transformed the retail norm, particularly when it comes to delivery. Shoppers now expect next day delivery as the standard delivery offering. The ‘buy anywhere, deliver anywhere’ mentality that customers now have, is causing many retailers to chase their tails when it comes to executing the supply chain vision.
With the boom in online selling, there has been a dramatic rise in the volume of orders being fulfilled from the warehouse, meaning retailers have had to think fast in order to maintain efficiency. The issue is that the warehouse and its systems were designed primarily for wholesale and store replenishment. Warehouses are expensive and it’s simply not profitable to build separate warehouses with separate inventories for wholesale, store and ecommerce orders. They need to invest in systems that can effectively and efficiently process orders from multiple channels, all from the same warehouse.
Critically, retailers must design their supply chain processes in a way that creates a superior and consistent customer experience. Customers expect visibility of their order from the moment it leaves the warehouse to the time it’s delivered.
They also want to be able to order items in store for home delivery or for a later collection if the goods aren’t currently in stock. These new expectations are driving a real need for effective order management, returns management, new store models and next generation point-of-sale (POS) systems. The supply chain should no longer be constrained by tradition and needs to be modernised and agile in order to keep up with the first mile, the last mile and everything in between.
Having access to valuable supply chain data shouldn’t be confined to the logistics planners and product marketers; developments in technology and connected devices now put information into the hands of every customer-facing employee, assisting them in providing a joined-up experience.
Store associates can access everything from purchase history to personalised offers, from lifetime value to interactions the consumer has had with the brand. This next generation of technology can tie up the loose ends of the supply chain, providing network-wide inventory visibility, deep insights into customer trends and preferences, and the ability for store associates to identify sales opportunities or make click and collect or home delivery orders straight from their POS devices.
Combining inventory accuracy with effective order management also ensures the customer can gain access to the product irrespective of location – whether ordered online, purchased in store, or ordered by a store associate for home delivery. In addition, this single source of information provides an essential platform for understanding the complete cost of a retail sale – rather than the channel specific costs that can be both inaccurate and misleading.
With this transparency and deep insight, retailers can fine tune the overall offer to match both customer behaviour and expectation, at the same time as ensuring every sales transaction is a profitable one.
Retail will always be an ever-changing model and there will continuously be a challenge to overcome, be it a new disruptor or change in customer behaviour. Regardless of how retail evolves, the supply chain will continue to be a Boardroom issue and will always provide the backbone to the business.
Retailers will constantly need to move goods from A to B, whether that involves shipping goods from a warehouse to fulfil a “buy-online-pick-up-in- store” order, or using store stock to fulfil a time-sensitive online order from a high-value customer. Those who invest in the supply chain now and truly embrace the technology available to them, won’t only stand the test of time, but will remain profitable against their competitors.