DC Velocity - November 2017

percent of transactions today are online. Even though retail stores may be struggling, the reality is that 90 percent [of transactions] still occur with the customer walking into the store.”

MAKING THE MOST OF THE STORE

Recent announcements from large retailers and online giants underscore Deutsch’s point. Consider this year’s purchase of Whole Foods Market by Amazon.com Inc. and, more recently, Nordstrom Inc.’s plans to launch Nordstrom Local, a network of small service-focused outlets that will carry no inventory but offer a wide array of services, including BOPIS and BORIS. Nordstrom leaders emphasized the importance of service, speed, and convenience—as well as the need to find new ways to engage customers—in announcing the launch earlier this fall.

Of course, creating that convenient customer experience requires a smooth-running supply chain, and for many companies, that will mean finding ways to bridge the gap between retail store operations and warehousing and distribution functions. Consider it this way: BOPIS services won’t get a company very far if the customer’s order isn’t available when he or she arrives to pick it up because a store associate is searching the aisles or digging through a disorganized stockroom to find it.

“Omnichannel is forcing people to deal with back-of-store operations,” says Deutsch, pointing to inventory control as a cornerstone of a successful omnichannel approach. Essentially, the store must become a logistics center, he adds.

Andrea Nottestad, market manager for retail supply
chain at reusable packaging provider Orbis, agrees, point-
ing to the growing complexity of moving goods through
the supply chain in an omnichannel environment. “Instead
of moving linearly—from the DC to the store, for exam-
ple—you now have goods moving out of the DC to the
retail environment, to another retail environment, and so
forth,” explains Nottestad. “Especially when competing in
next-day delivery, you see a lot more movement of material
in the network, and this increases the need for visibility
[throughout the supply channel].”
As a result, upgrading IT (information technology) sys-
tems, adjusting business processes, and redefining customer
service requirements are becoming important aspects of
the strategic planning process for retail organizations. As
Deutsch explains, consumers couldn’t care less where a
product is being fulfilled. They are more concerned about
delivery options and getting what they want when they
want it—placing warehousing, distribution, and logistics
functions front and center. “[Retailers] need to think in
terms of the inventory in the store as being, effectively, a
warehouse location,” Deutsch adds.

CONVENIENCE IS KEY

The convenience associated with dropping into your local store could also mean big business for those ready to capitalize on it. For one thing, in-store returns alleviate the hassle of paying for return postage and packaging—still the leading frustration for online shoppers, according to the JDA survey, which also revealed that nearly one in three shoppers have used BORIS services this year, up from just 20 percent in 2016.

BORIS services also increase foot traffic in stores, which can lead to higher sales. BOPIS services have a similar effect and have become even more popular in the last year. Half of respondents to the JDA survey, “While some retailers are already testing out ways to incentivize consumers to choose BOPIS services over home delivery, our research found that this could be a successful way to capture shopper attention in today’s competitive marketplace and further validate the role that BOPIS will play in the success of retail stores,” JDA’s Prewitt said in the statement, adding that incentives such as discounting will drive customers to the store, where they may buy more than they intended to, boosting store sales.

All of this underscores the importance of a seamless customer experience. Reinventing the physical store to take advantage of omnichannel trends is one step in that direction—but it’s a big step for many organizations.

As Nottestad explains, the speed at which all of this is happening may just be the greatest challenge of all. “A good handful of retailers have seen omnichannel or e-commerce as a part of their strategy for some time now,” she says. “But there are other retailers just beginning to respond to it, and the speed at which it is imposing change on their organization is a big challenge.”