Sophisticated Order Management -key to multi-channel

The key to a great multi-channel offering for consumers is sophisticated order management. Traditional retailing relied on the retailer being able to ensure that the right stock got to the right place at the right time. Retailers have invested amassive amounts in trying to make sure they get that right.

The problems in the multi-channel, e-commerce driven world is that it is impossible to predict sales accurately. Sales are affected by weather, trends, product innovation, lifestyle and social reccomendations, all of which are extremely volatile factors. Increasing volatility in demand is making it impossible to predict sales, and hence no matter how good your stock control systems are you cannot be certain that you will get stock allocation right.

Consequenlty if you cannot get the stock to the right location, move the order to where the stock exists.

As increasing portion of our sales are becoming order based, it is worth turning the stock paradigm on its head.

Consequently you need sophisticated order management systems that can route the order to where the stock is, allowing services like click & collect, and even store picking and despatch.

This principal can open up vast new vistas for sales growth. Retailers can start selling non-stocked items, and can route the orders to suppliers for direct delivery or delivery to store.

There is then no limit to how far a retailer goes in their growth strategies.

Sophisticated order management systems are the key......

Downsizing, downsizing, downsizing......

Retailers are all starting to downsize. Suddenly we are discovering we have too much store space. Next is about to launch small format stores, B&Q is about to free up space in sheds, Mothercare is reducing overall number of stores.

But how does a retailer downsize? We agree that as footfall reduces and e-commerce sales expand retailers will need to reduce the store footprint.

Options are:

• Treat stores as service points, reduce space and reduce the range of stocked items


• Keep only out-of-town stores, where footfall is guaranteed


• Reduce total number of stores, and give up physical presence in marginal areas

These are all tough choices. Almost all these choices will involve revenue sacrifice in order to maintain profitability, in the face of falling footfall.

Whatever the choices, the overhead costs retailers have been used to will have to be dramatically reduced.

We will see an increase in IT outsourcing, Finance outsourcing, sharing of logistics, and even sharing of outlet space.

There is a looming inevitability.........

Footfall in stores is falling!!!!

The financial times reported recently that footfall in UK high street stores had fallen about 9%. Some of this may be the economy but the rest might be the growth in on-line. Is this the begining of the end of store retailing. I have always maintained that once footfall falls below a certain level, stores become effectively unprofitable. I have called this the tipping point. How much does internet retailing have to grow before we reach tipping point. Or alternatively what do we need to do to keep customers coming back into store.

The advent of click and collect provides some hope, but will it be enough. It is hard to tell, but it has to be supplemented by something else. The in-store experience. We have to make human contact count, otherwise what is the point of going into a store.

There is some evidence that customers are willing to pay more for quality human contact. The retailers who are doing it well, like Majestic, John Lewis are doing so whilst maintaining price competitiveness, however the others will need to find excuses for charging a premium for human contact.

Of course this is all about the value of the services and expertise can be only provided by experienced sales staff.

Richer Sounds is another retailer that does that well.

Whatever the answer, retailers need to re-examine closely the role of stores. This problem is not going to disappear.