As the profile of bricks and mortar stores fundamentally change, retailers are rethinking their instore operations. With rising pressure from consumers, MHD asks Körber whether there is a better way to utilise instore inventory and footprint to meet the demands of today’s digital shoppers?
The latest e-commerce figures are in. Australia Post has revealed that e-commerce grew 57 per cent in 2020. Across the country, every state and territory recorded double digit e-commerce growth throughout last year.
With most restrictions surrounding shopping in-person now largely lifted throughout Australia, retailers are now tasked with serving a consumer base whose buying habits have fundamentally changed since the pandemic.
“As retailers are getting over the initial shock of the impact of COVID, we’re seeing an influx of requests to transform their instore profile to try and better serve their growing online consumer base,” Rizan Mawzoon, Head of Transformation ANZ at Körber Supply Chain Software says.
Pre-COVID, many iconic Australian retailers were heavily focused on growing their bricks and mortar store strategy and servicing customers in-person. “COVID-19 forced Australia to grow up very quickly when it came to e-commerce,” Rizan says.
Kmart, one of Australia’s largest and most well-known retailers, had to quickly adapt to a rise in online orders. The leading retailer converted almost 120 physical stores into mini fulfilment centres and rolled out Körber’s Android Voice solution across its fulfilment operations to keep up with online demand.
While some of the quick changes made during COVID-19 were to cater to the rapid rise in online demand, as shoppers return instore, their habits and expectations have completely changed.
This is leading to a merge of supply chain and retail operations and an opportunity for retailers to rethink the way they manage and operate their physical stores. By utilising technology and fulfilment capabilities that are traditionally found in a warehouse, retailers can improve delivery time, enhance customer experience and boost revenue.
“When you move away from the traditional mindset of a bricks and mortar store’s sole purpose being to serve instore customers, you can get creative and better serve your growing online consumers by looking to technology that is currently transforming warehouse and fulfilment centre operations,” Rizan says.
The changing profile of the retail store
Being able to service online customers with same-day or even one-hour delivery is a major opportunity for retailers. But the question remains: how do you use your store network to service both instore and online customers at the same time?
In response, retailers are looking to technology that is more commonly found in the warehouse to empower their employees with the tools and capabilities needed to dramatically increase fulfilment volumes.
Automation, picking assisting technology and innovative software are helping major retailers to adapt.
“There are now a number of instore and DC tech options that alleviate the growing pains of a post-pandemic retail e-commerce business. These are scalable, agile, mobile, flexible and collaborative and there are a number of very low-investment options such as AMRs, robots-as-a-service or hardware-as-a-service,” Anthony Beavis, General Manager ANZ at Körber Supply Chain Software says.
A good example is Chemist Warehouse, one of Australia’s largest pharmacy retailers, modifying its click-and-collect solution during COVID-19 to better service its growing online consumers with a same-day delivery service.
By thinking creatively, Körber developed an award-winning software solution that enabled the retailer to fulfil online orders from the store closest to the consumer.
“If a customer is based in rural Victoria, the order is fulfilled by their local store instead of coming from a central distribution centre. This enables Chemist Warehouse to provide their customers with a super-fast click and collect or delivery window,” Rizan says.
Iconic Aussie retailers such as Kmart and Chemist Warehouse hold a lot of inventory in their physical stores, so were in the perfect position to fulfil instore with minimal disruption to the customer experience.
“Retailers now have the right options by tech providers to achieve the ultimate technology backbone. E-commerce heads can now pivot their strategy almost overnight knowing they have the technological means to support their supply chain including picking, packing, sorting and last mile delivery efficiencies,” Anthony says.
For more specialist retailers, such as Decathlon – one of the world’s largest sporting retailers – an automated micro-fulfilment solution is better suited.
“Not all retailers hold as much inventory instore as Kmart and Chemist Warehouse, especially if they specialise in unique and high-value items. If someone orders something online and a retailer is only holding one or two of those items in stock instore, it’s extremely problematic if a customer purchases the same item instore before the online order is fulfilled,” Tim Baracz, Sales Director ANZ at Körber Supply Chain Software explains.
Capable of moving at speeds of close to one metre per second, the Körber AMR deployment at DHL and Decathlon’s Sydney fulfilment centre enables workers to despatch up to 144 customer orders per hour – more than double the productivity expected in a manual environment.
In 2020, Woolworths’ app and online store sales increased 100 per cent. As a result, it’s becoming increasingly common to see instore employees picking online orders in retail stores around the country.
However, Tim warns that this approach can be problematic if employees are not given the right tools to service the instore customers as well as those online.
“Kmart is a great example of best practice here. Körber’s Android Voice solution allows their instore employees to pick online orders, but they are still aware of what is happening around them. They don’t need to put a device down and their hands and eyes are free to serve any customers who need help instore,” Tim says.
There’s also the issue of stock availability and inventory control. Jamie Sterling, Director of Sales APAC at Körber Supply Chain Software uses the example of an online consumer being given misinformation around stock availability.
“If accurate inventory data isn’t available, this nightmare scenario is bound to happen,” he says. “When you’re running more systems, you need full end-to-end visibility of what’s being ordered in real time. Having the ability to prioritise your inventory and facilitate fast picking for online is one of the biggest challenges we’re seeing at the moment.”
As retailers fight for customer retention and loyalty, the online customer is becoming more important and speed to market is the key to success. The retailers who will succeed are the ones who make the most out of their store footprint and deploy the technology to empower their employees to service both online and instore customers.
“We might start to see longer opening hours, or overnight shifts working instore to pick orders to despatch the next morning. Retailers’ priorities lie in getting orders out the door, meeting the needs of their consumers and hitting their delivery expectations. With the right technology instore, you can use digital tools to meet this growing demand, remain competitive and boost revenue,” Jamie says.
This phenomenon is not just apparent in the merging of retail and supply chain roles and operations, but also in the merging of titles and skillsets across all levels of roles within these industries.
Nishan Wijemanne, Managing Director APAC at Körber Supply Chain and Global AMR Solutions leader asks: “Have you met someone recently with position titled Head of Innovation or Head of Transformation?”
Recruiting a combined skillset or leader that can deliver transformation and innovation across the organisation as opposed to just one core area of the business is paramount in the post-pandemic retail world, Nishan says.
“The pressure is on for Chief Information Officers or Heads of Retail Operations to innovate and transform. This industry is looking for innovative capabilities to adapt to this major operational change. Overall, this is a very exciting chapter in our industry. As many organisations are now acknowledging the importance of blending retail and supply chain operations, there’s a golden opportunity to conquer the last mile through innovative and scalable technology,” he concludes.
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