As we pen this Supply Chain Matters posting on the occurrence of the 2016 Cyber Monday shopping holiday, retail focused supply chain teams already know the obvious. Consumers continue to migrate toward online ordering channels and that presents an added cost challenge for customer fulfillment. The added test for this year will also be which internal teams, supply chain or brand creativity and marketing hold the dominant voice.
Once again, preliminary shopping data from this year’s Thanksgiving and Black Friday shopping holiday periods indicate a continued preference by consumers to avoid crowded shopping malls and physical stores. Most media outlets are currently citing data released by Adobe indicating that online shopping increased 8 percent during the recent shopping holidays. That data is supported by preliminary data from the National Retail Federation that monitored foot traffic among U.S. wide shopping malls. No doubt, other more rigorous quantification data may add more credence to the magnitude of this ongoing permanent channel shift.
Retail focused supply chain teams already know from previous year’s activities that online fulfillment presents added cost challenges in inventory and other logistics costs. This year, many teams have focused on multi-channel inventory optimization and combination ship from physical store fulfillment strategies. Likewise, investments have been made in more automated customer fulfillment centers that can serve both digital and physical channels.
Today’s edition of The Wall Street Journal features a report noting the Gap’s CEO Art Peck’s views regarding the industry’s long fascination with creative brand marketing executives, and that in the end, they have turned out to be “false messiahs.” Instead, the new head of Gap’s business unit is Sonia Syngal, former head of the retail division’s supply chain. The new focus is now on decentralization in merchandise management, enhanced product demand sensing and strategies focused more on supply chain agility and response.
Another test for this year will be how much more dominance online retailer Amazon gains in online market share via the combination of Amazon owned inventory and Fulfilled By Amazon online channels. The open question is whether the hosted online fulfillment capability provides a more cost effective channel for small and mid-sized online retailers.
Teams will certainly have more informed data over the coming weeks.
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