A few months ago I wrote a piece of research that broached the after market supply chain. Click here for link. This topic continues to grow in importance, especially for retailers. Why? Primarily due to the continued growth of the consumer’s voice within the retail supply chain. The saying “the customer is always right” has taken on a whole new degree of importance. Whereas this statement was limited to a finite number of interactions between consumer and retailer, today this saying carries much more gravitas. Consumer’s have a greater awareness to a larger portion of the retailer supply chain, and with that awareness comes greater expectations. One area where retailers are starting to feel this impact is in the after sales supply chain. Consumers want choice not only prior to the moment of truth, at the point of making a purchase, but also expect it post sales. The notion of “all sales are final” is rapidly becoming a dated concept. So what are retailers to do?
- Make sure you have a strategy…okay this might seem too simple, but there are number of retailers ranging from Nordstrom to Target that offer free returns. In 2015, close to 50% of retailers offered these services, placing a massive strain on their cash flow statements. So have a plan. Providing free returns, just because the likes of Amazon and Zappos are doing it, does not necessarily make business sense for your business. Consider creating a tiered returns policies. Big spenders or loyal customers can qualify for free returns, other customers fall into different levels. Perform some ABC cost analysis on the entire supply chain – figure out the true costs. Because nothing is truly “free.” Then create a logical strategy strategy of how to deal with the reverse supply chain.
- Can you turn the after sales into a strategic advantage? The after sales supply chain should be seen as an extension of your relationship with your customer. Returns are not a negative – the customer is not saying they don’t like your product – rather it is part of the customer journey. Can you learn from why the customer returned the item? Is there something that you could alter to the process? How far back in the supply chain can you change procedures to ensure returns are lowered? And you can make returns another revenue opportunity? There are some retailers that seek to incentive customers to return in store, knowing that over 50% of these will convert on another purchase. Could retailers drive those numbers higher? Viewing after sales supply chain as part of your customers’ journey is crucial to unlocking some strategic opportunities with post sales supply chains.
- Another data source – mine it! Why are consumers returning the product? Wrong size, color, style…the number of reasons is endless. Retailers need to embrace this level of data that could be ingested back into the supply chain. Can the product be redesigned? Is the marketing of the product not appropriate? Was there a better way to promote the item? Was the style just wrong? Retailers must embrace the data and information that the after sales supply chain can render. The ability to take the information, processes it quickly and render better decisions based on this information could prove to be a data lake worth swimming in.
- Don’t hesitate to lean on your solution providers to offer solutions. One theme I saw at NRF was some innovative thinking about how to handle the after sales supply chain. From software players such as JDA and IBM to service providers such as Wipro. Retailers shouldn’t hesitate to look their existing service and solution providers to assist with this journey. Don’t be shy about expecting your software and service providers to become a true partner when it comes to handling the post sales supply chain.
The after sales supply chain is evolving beyond being a cost center and a “nuisance” to retailers. It is part of the consumer journey and consumer expectations. Retailers, service providers and software vendors all have an opportunity in the after sales supply chain. Consumers are already there expecting better post sales service, it is up to the savvy retailers to meet those expectations.
Another cold January in New York City and another NRF Retail Big Show survived! As I have found with the countless times I have attended NRF the event is a whirlwind of insanity, but it is over before you know it. The insights, meetings and seeing old friends makes the entire adventure well worth it. So here are the take aways from the NRF16:
- The STORE IS BACK – okay maybe that is a tad dramatic, the store never went away, but the store in recent years has been down played. No longer is that the case. Many vendors and retailers I met with made a point of discussing their plans and initiatives for transforming their stores. The store is no longer viewed, by most, as simply the physical location that I want to go to in order to transact for an item. It is taking on a host of new responsibilities in the new commerce environment. At the crux of these new characteristics is the focus on the customer experience. Salesforce took us on a two site visit at Design Within Reach and Suitsupply, both in the Soho part of New York City. Other than the “cool” factor of the stores, what was discussed was how each store had meticulously thought of how to maximize the real estate they had and more importantly how they could leverage technology to better address their customers’ needs and experience once in the store. That experience has to go beyond offering you free cappuccinos or coupons, but how to ensure that the customer needs and untapped wants are addressed at the right time and with the right product. Other examples were of how True Religion is working with Aptos to empower the store associates to provide consumers with better experiences when it comes to finding that right pair of jeans. Putting the entire inventory catalog on the wrist of the store associate (via an Apple Watch) allows True Religion to be able to meet that customers’ demand, literally at the touch of
Weather cooperated…albeit cold!
a finger. There was also Avanade that had a smart grocery store shelf on display. Customers could simply pick up items and the smart displays would provide a host of information from nutritional content to where the food was sourced from. These were some intriguing examples of how retailers were working with service providers to bring exciting new technologies into the store – allowing the store to find its voice in the new commerce landscape.
- What is more important – perfect view of the order or the client? When we say perfect view of the order it really entails having a better understanding of your inventory levels across all channels. When it comes to the client is about truly understanding the context for the customer, what is driving their current, past and future demands. Having that 360 degree view of the customer has been all the rage recently, but are we missing the key element – the view of the order and of the inventory? This question kept ringing in my head as I went from meeting to meeting. What resonated with me was the need to address both, that the success of each was inevitably tied to the other. Service providers ranging from IBM to IFS are challenging the market on how to approach the need to have greater inventory and order visibility. It is not simply about the creative understanding of the customer, but also the ability to truly understand what products where and when that are available within the supply chain to fulfill the customers’ demands. Bottom line – regardless of how sophisticated and creative a retailer is in getting the customer to engage, if the product is not there at the moment of truth, then all those efforts are in vain.
- Smarter and dynamic fulfillment is the key – A major component of modern retail, driven by the consumer, is the push towards accessing orders wherever and whenever they desire. We already see the variety of methods we can access our orders – order on line delivery in store, order on line deliver to home, buy in store deliver to home, browse on line ship to store to name a few. As these forms of delivery continue to take on new dimensions, the business processes and technologies that support these new forms of last mile fulfillment will have to keep pace. This is continuing to place a strain on retail supply chains to meet these demands. Companies like 1800Flower are looking at all the nodes in their supply chain to assist in fulfilling their customer needs, in particular how their warehouses can play a more active role in the customer journey. We are seeing a growing number of retailers looking to redefine how they can meet the last mile in the retail supply chain. 2016 will continue to see these parts of the supply chain being leaned on to meet growing customer demands.
- Cool technologies are the future: smart displays, IoT, virtual reality and robots – Last year
Great catching up with old friends – Netsuite dinner.
there were lots of 3D printers on the floor, they seemed to have disappeared this year. Which I found surprising since in 2015 we have seen tangible examples of how retailers are leveraging 3D printers. For example Lowe’s is using the technology to offer customers the ability to procure items, such as door knobs and fixtures, that are no longer being produced. A great example of how retailers can expand their product offerings for their customers. Of course there remained plenty of examples of disruptive technologies on display on the floor of the Javits Center. Vendors such as Zebra Technologies, IFS, Avanade, Aptos to name a few were showcasing smart displays and how their customers were leveraging the technology. From greater view into their inventory to displaying information or being able to transact view the monitors – these smart displays are only beginning to find an important role within the store. Robotics were on display from the likes of Wipro – assisting with store navigation and shelf maintenance. IoT also was a theme that ran throughout the meetings I attended – companies like Checkpoint are continuing to add increased sensors and beacons within the store. They highlighted a timely use case in leveraging RFID and readers within a meat department of a grocer to allow greater and more efficient monitoring of the high margin but perishable product. In light of the recent news with Chipotle the use case is addressing headline news. Look towards 2016 as a continuation of disruptive technology growth within the retail landscape.
Once again I survived NRF and the cold New York City weather…it was actually a great trip…albeit I am still fighting some germs I picked up from the trip. I am very excited with the prospects for 2016 in the retail and supply chain space. Evolution is continuing to emerge at a rapid pace. Retailers cannot afford to take their eyes off the ball, they have to look internally to ensure they have the right business processes and mentality to keep pace. Service providers and vendors must also strive to act as true partners for this journey.
It is not going to be any easier in 2016, but it will continue to be exciting times.
You can also view my video from the show – click here.
Every January for the past few years I have made the trek to the Big Apple and spent the better part of the week at the cavernous Javits Center for the National Retail Federations Big Show. The event feels like the official kick off for the year. While I know many who grudgingly make their way to NRF, I have always enjoyed my time at the event. So what about this year? What will I be looking for from the show?
- The continued evolution towards the endless aisle – Matrix Commerce, is all about the merging of physical retail with eCommerce in all its forms. Where commerce is thought of without the distinction between what happens in a store or in cyberspace – it is just commerce. Obviously this is not a new concept, more an evolution of omni channel retail. One key need for Matrix Commerce is to be able to meet customer demands anywhere those demands emerge from – understanding inventory availability is the key. However, this remains a major challenge for retailers and holds back Matrix Commerce to take full flight. Too often retailers are still struggling to merge multiple systems, those that serve physical stores and those that may serve eCommerce, catalog driven sales and other channels. Often times these issues stem from past decisions made to treat eCommerce as separate from their traditional business – brick and mortar. Today more retailers are struggling to find ways to consolidate these systems and begin to gain greater visibility into their overall inventory positions. I will be interested to see what are the solutions and processes being offered for retailers. Without the ability to gain this visibility, the ability to achieve the endless aisle retailers are looking for will remain a major hurdle. Retailers cannot expect to be flexible and capable of meeting customer demands, regardless of which channel generates that demand, if they do not have true view into their inventory positions. This is not simply where inventory is, but what inventory has been promised and how to match order priority with accessible inventories. I am curious to see how the likes of Infor, Software AG, IBM, Aptos, Oracle and others are tackling this challenge.
- Workforce empowerment picks up momentum – An area that has picked up in intensity over the past year is the ability to bring smarter solutions, information and insights down to the store associate and even distribution center employee. How to bring more insights and tools to the store associates runs in parallel with the redefinition of the store itself. Stores are being asked to do more – become destinations through hosted contextual experiences within the stores, leveraging store inventory to fulfill orders, act as return depots and embrace show rooming. A key aspect of these new store uses will also change the store associate role within this infrastructure. In order to maximize both the store as well as the associate, retailers are looking for solution providers to offer ways in which technology and other solutions can be integrated with the store associate daily activities. Think mobile tools, wearables, greater system integration and better business processes all being put on the floor of retail brick and mortar locations – right in the hands of store associates and managers. This is also true for distribution center labor. With continued rise of eCommerce, fulfillment takes on a new dimension where distribution center labor is asked to not only package inventory to be delivered to stores but to provide direct to consumer fulfillment as retail supply chains are more flexible with regards to where they service demand. Look for more discussion, from such players as Salesforce, Netsuite, Kronos, and others, around new solutions and efforts made by those attending NRF on how they can empower retailers’ workforces with enhanced tools and insights.
- Tackling last mile logistics – All one has to do is look back a few weeks and realize that the crush on logistics, especially the last mile portion, continues to be a strain on the retail supply chain. Stories such as the one from the University of Connecticut’s mail room that is overwhelmed by package delivery, that Jet.com had to apologize to some of their customers for not being able to meet holiday order deadlines and real estate management firms such as Camden Property putting in policies that restrict and even prohibit package delivery to their properties, are all examples of the last mile retail crush. As we see more retailers offering free shipping and returns or the likes of Amazon and Jet.com incentivizing customers to look to receiving a wider array of products delivered to home – this issue will not go away. I am looking to NRF to learning of new and innovate manners vendors are looking to address this issue with their customers. How are traditional logistic solution providers such as JDA, Manhattan Associates, Oracle to name few are tackling this issue and what innovate strategies are they helping their customers implement?
- The revolution in customer relationships, beyond CRM – I hesitate to call this CRM…reason is that I believe that the connotation associated with CRM is limiting to what is really being offered to retailers. What is key in today’s retail world is getting a rich view of the customer, and not only at those customers’ interactions with the brand. Retailers, just like they do with their inventory, must approach customers across all channels that they touch the brand through. Similar to understanding your inventory position, knowing all the touch points and the context of those interactions are not easy to achieve. As retailers must pull from multiple and often time isolated systems, it is a daunting task to create a clear picture of consumers. Understanding goes beyond creating the 360 view of the customer but also how to apply this within the context of the store and even beyond. What are the technologies that can be leveraged within the store to build on this customer knowledge and help convert and build deeper relationships between the customer and the brand. Looking at NRF16, I am interested in seeing how the likes of Salesforce, Oracle, Engage.cx, SAP Hybris, Zebra Technologies to name a few are taking on this challenge.
I am bracing myself for busy and hectic 4 days in New York, but I am also looking forward to absorbing a lot of great information, seeing old friends and meeting new ones. Will I see you there? I hope so! What are you hoping to see at NRF this year?