In the next year, it won’t be your dad’s supply chain. Shoppers’ retail preferences will be unlike anything we’ve seen even just a year ago. More fluid. Less predictable. Highly distributed! These 4 emerging trends elevate the urgency for supply chain execs to move distributed order management (DOM) to the top of their lists.
#1: Retailers are testing brands, hiding the parent brand
It has only been a few years since ecommerce flipped the switch on brick-and-mortar, but the use of the term doesn’t fully convey the role that retail stores play in modern business.
The word omnichannel has been around for decades, but not until very recently has the industry realized the role of distributed order management in their aggregate financial equation.
Related:
What is an OMS (order management system)? What is the Difference Between OMS and DOM?
The intersection of traditional shopping and ‘online experiences’ is unavoidable. It has gone through a rapid period of change from the primary way we shopped, to its death being prematurely called ‘the showroom problem’, to continuing to be a critical piece of consumer brand strategy.
When did you notice that your favorite store had changed?
- The presence of kiosks linking buyers to the online store
- The ability to ship from other stores and warehouses
- Your store going dark completely, becoming a micro-distribution center (DC)?
When we talk about omnichannel order fulfillment, there can be a mistake in thinking it’s just about online. But the most successful brands are embracing the true meaning of a seamless experience for the customer. Buy online while in the store. Order online, but pick it up as you walk the mall.
Brands like Psycho Bunny have realized that it’s still retail, but it’s not. It has become something more.
Check out that new brand!
Did you see that new store at the mall? It looks familiar, like that other designer brand. It just might be.
Many new brands are not completely new at all. Brands are distancing themselves from the main brand or intentionally not calling it out. These could be new, related product lines or entirely new categories.
If you hadn’t seen the combo stores, you’d be forgiven for not knowing Pink was owned by Victoria’s Secret. Or that Clinique and MAC makeup is now sold in certain Target stores. Previously, you’d only find these higher-end products in non-drug stores like Ulta, alongside other brands like Urban Decay, Tarte, Too Faced, etc.
There could be a few reasons for a brand making this shift:
- Dabbling in new locales
- Attracting new customer personas
- Moving up or down the market significantly
- Wild departures from their image and marketing
Distributed order management is behind it
Brands are taking wild departures in how they target customers, but logistically, the retail supply chain doesn’t have the luxury.
Many of these ‘child brands’ need to leverage the same retail fulfillment methods of the parent. You can’t spin up DCs as fast as you can spin up online stores; it wouldn’t be efficient either.
Your distributed order management strategy must consider the DC and the store, both for taking and fulfilling orders.
The warehouse is wherever the product sits.
#2: Real estate is becoming more dynamic
Wait, was that here last time?
Traditional malls are anything but lately. The anchor store concept is still alive and well, but other tenants are increasingly dynamic.
Stores shift in and out of malls – indoor and walking – at an increased pace.
You used to have reasonably fixed occupancy that only changed when entire brands went out of business.
Here are a few of the scenarios that we’re seeing brands use:
Grow into it – or not
With mall occupancy continuing to struggle, some landlords are opting to be flexible on rental agreements, exit clauses, and the ability to move up or out if the situation changes for the tenant. In turn, this encourages retail gambles that would have too high an overhead to be worth the risk.
Highly Seasonal
Everyone is familiar with Spirit Halloween, who is a client of our 3PL customer Perimeter Global Logistics (PGL). Spirit Halloween runs massive, pop-up stores once a year for about 2-3 months around Halloween. Did you also know they have a year-round online store?
If you know 70%+ of your business can be reliably tied to a tight window of perfect execution, why carry the retail estate portfolio the rest of the year? That is UNLESS the pattern of peak season itself is shifting?
Take it Dark
If foot traffic isn’t paying the bills, make it a full-time DC. Some brands are realizing that their retail experience isn’t driving business. But they have a commitment to the space, or there is benefit in local fulfillment. These stores can provide a better experience in local area delivery than they could with their doors open.
Better yet, what if the stores can also become proxy warehouses to fulfill digital volumes?
Retailers need additional tools to fully integrate these stores’ back-of-house (BOH) operations into the rest of their supply chain. Order management is an advanced version of DOM that can handle selecting the right fulfillment center for each order, is needed.
No matter what form your footprint takes, make it available to your customers.
#3: Buy In Store, Ship to Home is gaining speed
The model was simple: go to the store, check out, and take it home.
Maybe that isn’t convenient for the customer; maybe it’s not the size or color they wanted. Stores have gotten wise to this and are attempting to capture the sale and address any issues immediately on the floor before consumers take it to Amazon.
It’s their showroom. They want that business.
Asking if you found everything isn’t an empty pleasantry now. Retail associates are looking to find that lost sale, that ‘retail shopping cart abandonment’, and triage at the register.
On a recent trip, my wife couldn’t find her size. She was told to take the wrong one to the register and they built a direct order while she checked out. Free of any shipping fees. Brands want to capture that sale and move inventory. And they are actively removing barriers to make it happen.
There is a two-fold value in this:
- You prevent a consumer from abandoning the rest of their purchases for the one thing they couldn’t get
- That information triggers automated loyalty programs to bring them back
A pure legacy POS is no longer enough
If a legacy POS is your plan to manage the complex web of inventory – amid the many different ways today’s consumers buy and receive products – please… Let us know how that works out for ya!
Omnichannel doesn’t mean “starts online” and retailers automatically embrace it. It’s a carefully orchestrated strategy that requires advanced distributed order management to keep pace with modern shopping habits.
#4: Humans still trust humans; personalized, well-positioned offers win
Many online brands are driving foot traffic back to stores. There is an appreciation that the online store fills a function, but that it’s not a complete replacement for touching the product and receiving help.
The modern retail supply chain is not about having large amounts of inventory on display and expecting consumers to root through it. Every major brand I’ve shopped at recently has asked who helped me on the floor.
Just as the last point, this isn’t a platitude. They want to know. Were you guided to what you were looking for? Were alternatives recommended? Inventory isn’t moving itself; skilled floor teams are the difference between turns and aging inventory. Especially in apparel, this can be an incredible drag on margins.
Suggestive selling drives incredible value for retail brands – especially those in lifestyle or image. There’s a reason that consumers get offers to go to the store instead of visiting their website.
Each channel has a distinct experience for the user and value to the business. But the trick is, consumers can’t ever feel there’s a difference.
Is your distributed order management process as fluid as how people shop?
Consumer preference continues to be fluid and changing. Some want full online experiences and minimal interaction. Others seek out guided shopping experiences and stores willing to help them find something they didn’t know they needed.
Omnichannel, in principle, delivers this promise. Getting what, where, when, and how you want it. Distributed order management systems make it happen by erasing the boundary between touchpoints. Critically, thriving in modern markets can’t be done in the absence of advanced order management software.