Click and collect: Consumer’s dream – retailer’s nightmare?

Introduction

“Fulfilment is poised to be the next big battleground in retail.” – Natalie Berg, Planet Retail, writing in Retail Gazette, 2014

Click and collect is creating a whole new playing field for retailers. Local shops, car parks and 24-hour garages are now being commandeered as pick-up spots for shopping ordered online. The supermarket chain Waitrose has gone one better; working with logistics firm Bybox, it is setting up refrigerated lockers at Gatwick, enabling travellers to order online and then pick up supplies on the way home from their holiday or other trips. Of course some of these travellers may be forward-thinking enough to order their groceries well in advance of their return. However, we’ve grown so used to rapid fulfilment, that it’s likely many will be clicking away at the airport just before boarding their homecoming flight.

And this encapsulates the challenge of click and collect for retailers and their supply chain. Consumers can buy when they want, collect when they want and from wherever they want. But the retail supply chain has to be ready to act at almost a moment’s notice. The pressure is on to become even more accurate, faster and – because demand is unpredictable – extremely agile.

The rise of Click and Collect

At the start of the e-retail revolution, there was one element that was out of kilter. The delivery process was still in the dark ages, stuck in a the mind-set that there was always someone at home – all day long – who could receive the package. Gradually an increasing number of retailers and their logistics firms introduced time slots, but this was still no use for working households who could hardly take a few hours off work every time they ordered something online.

It took a while for the Click and Collect concept to evolve – and it is still doing so, with pick up points being moved so that consumers don’t even have to go to a store at all, or even deviate very far from their route home from work. Transport hubs are now becoming consumer aware. London Underground and Network Rail have both recently announced plans to turn their stations into pickup points for a range of different retailers.

Two-thirds of the top 50 UK retailers now offer a Click and Collect service and, in a report published in spring 2014, Planet Retail suggests that Click and Collect shopping will double in the UK by 2017.

Challenges for Retailers

Today’s retailers have become like the proverbial swan – gliding serenely on the surface as they announce their latest plans, but paddling furiously underneath to make them happen. The reason? Click and Collect encompasses all the challenges created by today’s multi-channel retail environment – and has intensified them further. For example:

• Open all hours: Speed of delivery has now become a key differentiator of brands – and with some retailers establishing pick-up points at tube stations and 24-hour petrol stations, the race is on to provide not just a next day delivery, but same day. This is even evolving to be able to deliver within two-hours of ordering, and will ultimately become round-the-clock. It looks as though closing time is becoming a thing of the past.

• Later clicks: On top of this, with the rise in mobile shopping, consumers have got used to ‘clicking’ later in the day, often when they are on the commute home or while they are ‘second screening’ whilst watching TV in the evening. Previously, when customers ordered only via laptops and PCs, demand was steadier and more predictable. Warehouses or distribution centres had time to pick, pack, dispatch and deliver orders and still meet expectations. Next day delivery was a premium service. Now retailers make ‘late night pledges’ to their customers and the window for back end operations to fulfil is becoming smaller.

• Changing volumes: Changing seasonal patterns and high SKU churn is taking the certainty out of business volumes. Trends are no longer season, seemingly with a new ‘must have’ launch happening every few weeks. Combined with this, mobile shoppers tend to be more impulsive than traditional     consumers. For example, a Champions’ League match on the TV or a bout of sunny barbecue weather directly imparts the nation’s purchase profile as     mobile and tablets are temporarily abandoned for alternative entertainment. So if a warehouse or logistics provider has staffed up for unprecedented demand, it risks ruin through the cost of unused capacity.

• Dovetailing operations: Click and Collect is an organic extension of a store’s day-to-day activities and, as such needs to interact with the store’s traditional network to execute work faster and with more flexibility than ever before. Not only is inventory visibility important but the ability to pick and ship to NDC or e-commerce warehouse performance levels is an increasing challenge for regional DC’s and indeed for many retail stores.

Market impact

Because of these challenges, Click and Collect is making an impact on the retail landscape. For example it is driving:

The growing use of third-party logistics providers: The landscape is becoming so complex that many retailers are outsourcing their logistics operations to third party providers (3PLs). As a result these are becoming the industry experts, ever striving to become better and faster. However, because of the current, fast-changing environment, many of these are hired on short term contracts with hard-hitting key performance indicators and service level agreements to achieve. Today’s 3PLs must find new ways to demonstrate their own unique value if they are going to renew and win contracts.

Fragmentation of distribution networks: The days of having one huge warehouse dedicated to single product lines are numbered. Dark stores and small satellite distribution centres are filling this gap. Much Click and Collect business is fulfilled from the retail outlet itself – which suggests a return to holding more stock back-of-store.

The need for agility: Increasingly, warehouses and distribution centres must nurture a flexible workforce to cope with the peaks and troughs of demand. There’s an urgent need to address rigid working patterns to avoid employing extra staff in anticipation of an uplift, only to have them wasting time when it doesn’t happen. Or indeed missing an opportunity because of unpredicted heavy demand.

Faster IT implementations: These market conditions demand fast action. Market size is not infinite, just ever-changing. So, costly, long-drawn out IT implementations may not be suitable for a demand chain in a state of constant flux. Any innovation much be relatively fast and simple to deploy. It must build on the existing strengths of the business and yet be disruptive enough to make the step-change necessary. Integrated systems are no longer a nice to have but an absolute must have.

The need to be right first time: With logistics schedules and time windows pared to the bone, any avoidable inaccuracies will erode the profit margins, which are already under pressure given the increase in “default” e-commerce returns which are often as high as eight times more costly to process than outbound logistics.

A flexible and scalable answer

Voice solutions enable staff to work hands and eyes free and are ideally suited to high-paced pick piece environments from huge warehouses to small stock rooms.

With the best systems, anyone including novice or agency staff, is able to learn the business and the technology in a single sitting ‘. They can be up and running, delivering error-free performance, comparable to more experienced operators, in their first shift.

After this basic training they receive, real-time simple familiar instructions, enabling them to work in multiple workflows, becoming multi-skilled and of high value to an agile, demand-driven operation.

Shift managers also receive a real-time view of their progress through their workload, enabling them to plan for peaks and troughs and make well-informed decisions on moving workers to relieve pressure points. No longer working in silos, the inherent workforce resource management transforms work patterns, enabling staff to be optimised and eliminating the need for over-staffing during lulls in business.

Also, more and more businesses are using the technology beyond picking, adding for example, cycle-counting, receiving, loading, put-away, replenishment and put-to-store to their voice-enabled tasks maximising their return on investment.

Importantly, Voice technology can also be scaled up or down, according to the changing demands of a supply chain, or seasonal peaks, making it ideal for the volatility of the Click and Collect era.

By Darrel Williams, Regional Director, Northern Europe and South Africa, Honeywell Vocollect Solutions.

www.vocollect.co.uk