Monthly Archives: August 2016

Back to School: the second happiest time of the year for retailers…but not necessarily for kids!

As the last days of summer come to lazy close—sigh—retailers and parents of school children should all be squealing with glee.  Okay maybe that’s an exaggeration, but the end of summer does mark the beginning of the retail race to the black. They are looking to beginning to build up their holiday season inventories while ensuring they capture as much back to school revenue as possible. However the back to school season is a microcosm of the shifting sands in the retail world.

Back to school is the second largest sales driver, right behind the end of year holidays – accounting for over $27b worth of sales.[1] But while this time of the year is a boon for retail, there are signs this rosy picture is cracking because of the usual disruptors.  Their disruptions come primarily in the form of growth in consumerization,[2] and the pressures from ecommerce giants such as Amazon.

Let’s dig into some NRF numbers:

  • 97% of online sites visited are either super centers or office supply sites.
  • 84% of parents will only purchase online if free shipping is offered.
  • Over a third of parents will make purchases online.

Retailers that are in this space are probably selling commodity items – a heavy percentage of office supplies. (Click here for an example list.)

These items are difficult to differentiate through value-added services, customization, or contextual experiences. They are often based on convenience and price, and are usually not overly bulky but can be heavy. Why is this important?

Consumers are going to shop for these products and look for value and cost to be the biggest drivers. This is in the sweet spot for the likes of Amazon and Jet.com. But could some of the items – like paper and books – place an additional strain on fulfillment for retailers? Possibly. What is the opportunity for retailers to thwart being overwhelmed by Amazon’s ecommerce prowess?

Here are some strategies:

  • Focus on an in-depth understanding of your network. Where can you hold back inventory? Can you fulfill from different nodes, and are there parts of your network that can push inventory out earlier in the process? Bring more flexibility to your distribution and fulfillment capacities to control your costs, but most importantly, retain customers through profitable fulfillment. As the data from NRF reminds retailers, consumers want and expect free shipping, how can retailers better leverage a network view of their inventory to address this trend.
  • Leverage the digital supply chain to focus on creating a user profile. Can retailers follow their customers as they progress from pre-K to college and beyond? This insight may open up opportunities to provide location-based value-added services. If a child is about to be a junior in high school, inform them of a local college prep program. Create some contextual wrappers around your inventory. Leverage the digital mirror to your supply chain to create stickiness to your brand. Hopefully this not allows for a degree of brand loyalty, but allows the retailer to do a better job with demand sensing and shaping.

Back to school can be stressful enough – as retailers let’s not have the added stress of how to continue to drive and capture revenue in a world of omnichannel and consumer-driven supply chains. There are opportunities to protect revenue but also uncover new opportunities; the retailers that start to think network and digital are pointed in the right direction.

[1] Data from NRF – https://nrf.com/news/infographic-look-back-school-supplies-lists-and-online-shopping

[2] Consumerization of the retail supply chain is the shift in dynamic towards the consumer. The consumer has become the focal point in the retail supply chain.

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Filed under Current Events, eCommerce, Supply Chain