Despite the rising consumer demand for digital and hybrid retail, more than half (52%) of retailers aren’t currently able to fulfil ecommerce orders via the store network profitably, research finds.
With the latest data from Edge by Ascential suggesting that the growing demand for digital will prompt retailers to dedicate up to a third of their store space globally to ecommerce order fulfilment, original research of 100 senior UK retailers by Pricer, showed that in response to the rising demand for online, almost three quarters (72%) of retailers have increased replenishment through their store network, and two thirds (64%) have increased stock allocations in-store to keep up with rising ecommerce demand.
Meanwhile, more than half (54%) of UK retailers have increased store staffing to allow them to pick and pack online orders fulfilled from the store, with almost a quarter (23%) saying staff are having to perform more tasks to service ecommerce orders at store level.
However, fewer than half (48%) say they are currently fulfilling online orders from the store profitably. And, while almost three in ten (27%) expect to return a profit from ecommerce orders fulfilled via bricks-and-mortar networks within a year, 5% say they don’t expect ever to be able to achieve profitability with these types of orders.
At a time when inflationary pressure is being felt across retailers’ manufacturing, supply chains and labour costs, further squeezing already tight margins, 45% of the senior retail Operations executives polled said thatmaintaining margin and keeping online orders profitable while meeting customer demand for digital was one of their main challenges. And half of UK retailers (50%) say they have looked at cost saving exercises elsewhere as they don’t make money on online orders fulfilled through the store.
Of the store associates polled, 26% said that technologies that make picking and packing ecommerce orders quicker would make them become more efficient in their day-to-day roles, while 21% said ‘Pick-To-Light’, where items making up an ecommerce order automatically flashed on the shelf edge, would also improve operational efficiencies in the picking and packing of ecommerce orders in-store.
Duncan Potter, CMO at Pricer, comments: “Retailers are walking a fine balance between what consumers are now demanding from the store and what is operationally sound – and profitable – to offer. There’s no denying that shoppers are continuing to demand digital – but making digital pay when it is being fulfilled from the store network is a conundrum many are still to solve. Making every element of the store work harder, through automation, will allow retailers to unlock efficiencies to protect margins on online orders served through the store, while also freeing up staff from the operational ties of picking and packing to focus their energies on customer-service delivery.”