This author penned a guest commentary on the Chainalytics blog in late January indicating that the implications of Omni-channel commerce are more profound for supply chain leaders.
In that commentary, I amplified that the implications of Omni-channel commerce are becoming much more profound for B2C focused supply chain leaders. The commentary was purposely blunt because the trends and implications of consumers who have become much more accustomed to online buying will reverberate across supply chain organizations with strategies anchored in former brick-and-mortar store-based distribution and customer fulfillment strategies. It was meant to be a wake-up call.
Our takeaway from the posting was that consumer-facing industry supply chain leaders need to quickly internalize the reality that permanent changes in shopping behavior are underway and that education for the broader business and internal supply chain team needs to proactively begin as to the implications of these fast-moving trends. The “Amazon effect” is very real and profound.
Another proof-point stems from significant news this week. For the past two days, media has been echoing an announcement from one of the largest office supplies retailers in the United States.
Staples is closing a significant amount of its North American based stores and at the same time, rightsizing surviving brisk-and-mortar retail outlets to reflect a far different merchandising model. According to published reports, Staples CEO Ron Sargent has been very clear that the retailer is not getting out of the retail business but rather shifting business strategies to reflect that nearly half of these retailers’ annual revenues were consummated on Staples.com and its online fulfillment channels. The further reality was that same-store sales have declined for six of the last seven years.
Surviving brick-and-mortar stores will be evaluated on location and profitability, with stocking strategies that reinforce high selling products with healthy margins. Slower selling items will revert to online availability. We assume the retailer will further continue to feature physical stores as adjuncts to online services, such as customer pick-up or merchandise return outlets. This significantly changed strategy will more than likely affect the current Staples logistics and distribution network as online fulfillment centers becomes the primary emphasis.
As the Wall Street Journal pointed out, retailers of electronics, appliances and office suppliers have been hit the hardest because these merchandise items were the first to move online. Radio Shack announced this week that it would close upwards of 1200 retail stores. Other product areas are sure to follow.
Insure that your strategic and operating plans factor these new realities and that you have the talent, process and systems capabilities to Assure a positive transition to the new realities of Omni-channel commerce.