As we hit September, the back to school season is upon us. In my case, my middle daughter is leaving home for the first time to begin her college experience. Unlike my distant college experience, she and her roommates put together a tidy spreadsheet detailing who would be responsible for supplying what in their new apartment. Days before their move-in date, one glaring weakness emerged in their planning: who would bring the router?
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| Much of this safety stock could be eliminated if the retailer had a detailed understanding of their purchase order lifecycle. |
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"Oh, my dad will get it" responded my daughter, "he is in the computer business…", as though I enjoyed configuring home routers in my spare time. While the spreadsheet was well-intended, teenage procrastination somehow had seeped into their well-defined project plan. The timing of the omission meant Amazon was no longer an option and a traditional brick and mortal retailer five hours away in Gainesville, Florida would be my only solution: BOPIS (Buy Online, Pickup in Store) to the rescue.
In 2015, I wrote an article for Supply Chain Digest suggesting that traditional brick and mortar retailers had a strategic edge over the e-commerce retailers when the consumer absolutely needed the product “now”. Apparently, that trend continues to grow: a recent article on
FierceRetail reports BOPIS is up 44% YTD. While 2-day delivery has become table stakes for the e-comm world, this report suggests there exists a growing demographic of consumers for whom only “now” will suffice.
I believe this represents both opportunities and challenges for the traditional retailer. Opportunities exist because that segment of the population demands instant gratification which allows traditional retailers to firmly stake out a corner of the ring that e-comm vendors can't offer, yet.
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Challenges exist because traditional retailers' supply chains must be agile enough to adapt to this rapidly shifting marketplace. From my perspective, based on my work with senior retail supply chain executives, supply chains of the future will require the following four characteristics going forward:
1. Visibility – the ability to see into the supply chain, understand performance, anticipate problems and react.
2. Speed – to improve traditional delivery times, shrink the purchase order lifecycle and optimize capital by reducing overall inventory investment.
3. Execution – to operate with a minimum amount of supply disruptions creating trust amongst all stakeholders.
 4. Inventory Integrity – to be able to publish with confidence, inventory levels that will maximize sales, delight customers and protect the brand.
Why are these characteristics so important to traditional retailers moving forward? Because e-comm retailers are not their only competition. Traditional retailers must also compete with exchanges (Wal-Mart, Amazon, Rakuten and New Egg) and with brands that offer direct-to-consumer (DTC) sales venues (Nike, New Balance and M&M's).
In future articles, I will examine each of these following areas and provide specific examples where these characteristics are "table stakes" for traditional retailers moving forward. As I have mentioned in previous articles, supply chains continue to increase the competitive value they bring to retailers.
And of course, you can't ship to store if you don't have the product in the DC, or you have to ship more expensively from a more remote DC or vendor drop ship. So as with most things in retail, vendor performance is key, which involves compliance, performance management, and reducing variability.
Will BOPIS be the saving grace for traditional retailers moving for forward? Will it continue to grow as the FierceRetail report suggests? Will it be a key differentiator in an industry that continues to shift and fragment on what seems like a daily basis? We will see how that plays out, but, in my case, I'm grateful that it's the perfect antidote for teenage procrastination.
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