5 min read

Top Challenges Retailers Face

Apr 15, 2019 9:42:02 AM

Retailers live in a world of high demands and customer expectations. In order for brands to stay relevant in the market place, they need to constantly evolve and adapt to the challenges they face. The e-commerce boom and rise of the “digital generation present its own set of unique challenges. Here are the top challenges retailers face.   

  1. Making “seamless” the new normal
  2. Serving the “on-demand” generation
  3. Continuing to add value
  4. Fighting the “Amazon effect” (that still exists)
  5. Creating visibility in the supply chain

Making “seamless” the new normal

Customer experience is no longer only about what the customer experiences as soon as they walk into your store. With the rise of online shopping, customers now expect a seamless, omni-channel experience. They want to research a product online and then buy it in-store, or vice versa. And they expect those experiences to be cohesive.

While e-commerce sales are on track to hit over $4B by 2021, industry experts believe that the brick-and-mortar stores are here to stay. In the US, approximately 96% of Americas shop online, but most of their actual shopping budget (around 65%) is spent in physical stores. At the outdoor retailer, REI, approximately 75% of their customers look at their website or app before making an in-store purchase.

Seamless experiences also include the returns process. When surveyed, 79% of online shoppers said free returns were important when selecting a retailer. Do you have the inventory systems in place where your customers can purchase something online and return it in-store? How easy is your online returns process? Subscription services like Stitch Fix say their customers expect their returns to be easy. Returns are built into their business model as customers can send back items they don’t want, free of charge. Their customers aren’t worried about the logistics behind the scenes, they are just looking forward to their next “fix”.

Brands who want to give consumers a seamless experience need to ensure their supply chain is set up to support their e-commerce, in-store, and returns operations. Inventory management and accuracy are key when delivering that seamless experience customers desire. As consumers view all channels as one, it’s important for brands to think through their different channels to ensure a cohesive customer experience.

Serving the “on-demand” generation

From television shows and movies to everyday products, Millennials and Gen Z have come to expect everything “on demand”. Netflix and Amazon Prime Now have trained these generations to receive what they want, whenever they want and retailers now have to come up with creative ways to meet those demands. How does your brand sell to this “digital generation”? Do you have the right network in place to meet their high expectations for delivery and service?

Some retailers are turning to urban fulfillment to meet the delivery demands of this on-demand generation. Eighty-eight percent of consumers are willing to pay for same-day (or faster) delivery. Of those, millennials are 118% more likely than non-millennials to pay extra for same-day delivery.  Same-day delivery, in-store pickup, crowd-sourcing drivers, and lockers are just a few ways brands are experimenting with getting their products to their consumers in the ways they want to receive them.  

As brands start thinking about creative ways for urban fulfillment, they also need to think about what they need to do on the back end to support these ideas. Do you have a lot of customers in one location? If so, maybe you offer same-day delivery in that area. Or maybe some of your retail stores can double as an urban fulfillment center? Whatever option you choose, make sure your network is set up to fulfill those orders.

Continuing to add value

Brands should lean on their supply chain providers to help carry the load of these increasing customer demands. Not everything needs to be done by the salesperson working on the floor. Your supply chain partner can do a lot of the heavy lifting for you. Markdowns, inventory management, display building, and returns management are just a few of the services a third-party logistics provider (3pl) can perform so that your salespeople are interacting with customers and not counting inventory in the stockroom.

To meet these increasing demands, brands are relying more heavily on technology to optimize their workforce. Many retailers are working with their logistics providers to implement robotics in the warehouse - both collaborative and goods-to-man robots. These robots are easy to learn and can cut staff onboarding time by up to 50% while increasing productivity 100%.

Fighting the “Amazon effect” (that still exists)

It’s not a secret that the Amazon effect still exists. Not only have they influenced faster delivery times and dominated the e-commerce market (Amazon currently has a 49% market share), but Amazon has also led to the rise of the marketplace. Now companies like Macy’s, Saks, and Walmart (plus over 250 other retailers) have started selling other brands on their sites.

Brands now have two options: sell their products on other marketplaces, or become a marketplace themselves. While becoming a marketplace may sound appealing, you also need to consider the impact a marketplace could have on your brand. If a customer buys a faulty product from another vendor on your site, how does that affect your reputation? If you decide to become a marketplace, what does your fulfillment operation look like?

Many brands feel like they have to sell their products on Amazon or they will be missing out on revenue (due to that enormous market share statistic mentioned earlier). However, there are a lot of challenges to selling on Amazon and you need to decide if that is the right move for your brand. Does it make sense to have your products Fulfilled By Amazon (FBA) or should you consider Drop Shipping? Making the wrong decision could result in high fines and upset customers.   

Creating visibility in the supply chain

Retailers are all about creating that perfect customer experience. To do that, retailers and their supply chains need to be able to share information faster so they can serve their customers better.

At the National Retail Federation’s “Big Show”, retailers were asked to name the biggest challenge facing retailers today. The top two answers revolved around data and visibility. Many retailers are using radio frequency identification (RFID) technology to track items across both offline and online channels. This gives brands total end-to-end visibility into what’s working and what’s not in their supply chain. Knowing exactly what’s selling and what’s being returned helps accelerate inventory turns, flag counterfeit returns and reduce loss and theft.

Full visibility into your supply chain arms your marketing and sales teams with the data they need to develop new products and identify potentially profitable cross-sell and up-sell opportunities.

The retail landscape is constantly evolving and brands need to be able to quickly adapt to their customers’ demands. By having a flexible and agile supply chain partner, brands can successfully navigate these challenges.   


Written by GEODIS