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Shopping simplicity and logistics sophistication – is this the route to better profits in retail?

By Nathan Wrench - Last updated: Friday, January 16, 2015

Anyone old enough to have lived through the 1980s will remember with affection the ‘mullet’ hairstyle.  Beloved by footballers and pop stars and elevated to near art-form by the likes of Pat Sharp and Chris Waddle, this haircut famously featured elegant simplicity at the front, perfectly blended to intense sophistication at the rear.

In this, the mullet neatly summarises the technical challenges for any retailer today, as described by James Curleigh, President of Levi Strauss & Co. at the National Retail Federation Big Show in New York this week.  Customers presented with multiple options  for purchasing goods and services are not choosing between traditional bricks & mortar shops and on-line retailers; the talk in retail is no longer of this battle between channels.  Rather, they are embracing every opportunity to research their purchases, to choose the best match to their requirements at a price they’re willing to pay; to collect, buy or take delivery of their goods in a manner they find convenient…and then to share and update the world on their shopping experience via social media.  A successful retailer must deal with this “omni-channel” behaviour and secure custom via whichever method best suits their customer.  They must present a simple front of house, with a unified brand and a cohesive shopping experience, and support this experience with with shopper-engagement and cutting-edge logistics technology at the back-end in order to retain a competitive advantage.

This omni-channel retail experience is the talk of the moment.  It represents a seismic shift in buying behaviour and demands massive technology investment from retailers.  Leading this charge is the British retailer the John Lewis Partnership; one of the most advanced omni-channel providers in the world’s most developed omni-channel retail environment.  Paul Cody, head of IT at John Lewis described how massively their shoppers’ behaviour has changed in the last five years, to the point that 65% of all their customers now research on-line before coming into one of their department stores.  More than this, 30% of their customers go into the shop for research before buying on-line, and 56% of all purchases are now “Click & Collect,” where the shopper simply uses the store as a place to pick up the goods that they’ve already purchased.

With the shopper seeing only a single, simple front end – one brand identity – the nonsense of a retailer allowing its on-line channel to compete with the separate physical bricks & mortar channel, as has often been the case in the past, needs to be addressed.  However, this brings all sorts of operational and technical challenges.  How does a retailer track its customers between channels?  How do they ensure that stocks are held in the best, most efficient manner but brought to the shopper when she needs them?  The principles of inventory visibility, intelligent order fulfilment and labour productivity will drive the most profitable commerce options, with intelligent, top-down architected omni-channel IT as the fundamental building block.

By removing the silos within the business; integrating the shop systems, distribution systems and on-line systems, retail companies can improve their operational and logistics efficiency and maximise profitability, while enabling a better customer experience.  With in-store sensors coupled to powerful signal processing algorithms and data analytics connecting the most competitive retailers to their customers better than ever before, only the most technologically aware retailers will survive in this new retail age…is it time to re-think the mullet?


AuthorNathan Wrench

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