Omnichannel

Beyond Omnichannel: Shoppers Lead the Way

Shoppers’ demands for a personalized and seamless experience across all channels are outpacing the food industry’s ability to keep up. That’s one of the key findings of “Retail Insights: Moving Beyond Omnichannel,” the fifth annual retail industry benchmark report conducted by Retail Systems Research on behalf of SPS Commerce.

The report is based on a survey of more than 500 grocery and other retailers, suppliers, distributors and logistics firms worldwide on behalf of SPS Commerce.

According to the report, 35 percent of retailers are on track with their omnichannel execution, up nearly 200 percent year-over-year. This shows that omnichannel retail, once a standalone initiative, finally is becoming a mainstream foundation for broader business strategies focused on meeting consumers’ changing shopping expectations.

However, meeting consumer demands remains a key challenge, with 75 percent of survey respondents reporting it is their top priority over the next five years.

As always, these demands center on price and product availability, but this year’s report also acknowledges the urgency of streamlining order fulfillment, the importance of real-time inventory visibility, and the critical role accurate item information plays in delivering the seamless, personalized, cross-channel experience consumers are seeking.

That experience is being driven by the demands of the growing emergence of tech-savvy shoppers. As a result, the way people shop and buy for their food is changing. Specifically, the following two changes:

  • Shopping more often. Years ago, people bought a lot of canned and frozen goods, which meant they could stock up on everything they needed during a once-a-week trip to the grocery store. Today, people are buying less prepackaged food in favor of fresher foods. Because these foods need to be consumed within a few days of purchase, people typically shop two or even three times a week.
  • Shopping via multiple channels. While shoppers traditionally bought all their groceries at a neighborhood grocery store, today’s shoppers take advantage of multiple shopping channels. These channels include national chains such as Safeway and Winn-Dixie, as well as local chains like Gourmet Garage in New York City. Big box stores such as Target and Wal-Mart also are popular, as are local farmers markets. And because millennials value convenience, online orders delivered via local grocers or AmazonFresh are becoming more popular. 

The road ahead: collaboration

To address these and other changes and ensure the fresh food consumers want, grocers must speed up their supply chains. This means greater collaboration. In fact, no matter where they are in the ecosystem, survey respondents report a desire to collaborate better with their trading partners on everything from item attributes and sell-through data to inventory visibility, which continues to be one of the major internal drags on omnichannel execution and profitability.

According to the report, only 78 percent of retail respondents have full visibility into their distribution center inventory and only 77 percent have full visibility into their in-store inventory—percentages that remain virtually identical to those of the previous year. The percentages are lower for distributors and suppliers: Only 66 percent of distributors and 62 percent of suppliers have visibility into inventory at their own distribution centers. And when it comes to partner inventory, the percentages further drop, with only 47 percent of distributors and 45 percent of suppliers having visibility into their partners’ inventory.

Other findings from the report, include:

  • Order fulfillment execution continues to be difficult due to dramatically increasing order volume and complexity, with 55 percent of respondents expecting expanded assortments, 53 percent expecting increased online orders and 43 percent expecting increased item attribute sets in 2017.
  • Forty-three percent of respondents expect their use of item attributes to increase in 2017.
  • Legacy systems remain a top factor hindering omnichannel execution, with 29 percent of companies identifying legacy systems as their top obstacle this year, as compared to 43 percent last year.
  • Budgets also remain an issue. Only 48 percent of retail respondents are increasing their budgets in 2017, and 18 percent are cutting them, despite the fact that 74 percent expect 2017 sales to be either “somewhat better” or “much better” than 2016 sales. Suppliers are even more optimistic, with 84 percent expecting 2017 sales to surpass those of 2016.

If Not Now, When?

Consumers have set the course for the future of omnichannel retailing. To meet their expectations, grocers must get even more serious about thinking of all channels from a single viewpoint. While it will be a multi-year journey, planning must start now, quickly followed by both action and results.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s