2021 Trends: How will the retail warehouse adapt?

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2021 Trends: How will the retail warehouse adapt?

27 November 2020

  • retail predictions part 1

 

Virtually every business sector will have experienced new hurdles to overcome in 2020 as a result of the pandemic. It has been most intensely challenging for supply chain and logistics operations and has forced businesses to adapt, offer new services and embrace technology at a much faster rate than they might have otherwise.

Retail was especially hard hit as the early days of the Covid pandemic meant shops had to close. Instead, consumers switched in droves to online ecommerce and now, even the most reluctant Internet shoppers have become converts. Now in the UK, the volume of sales made via e-commerce has risen to 30% and it’s the warehouse that lies right at the centre of a successful e-tail operation. It’s fundamental to any ecommerce strategy working efficiently.

Indigo’s top predictions for retail in 2021 and beyond

Ecommerce will grow and grow!

Where it has been an option, e-commerce has enabled retailers to minimise lost revenues and potentially appeal to a whole new segment of the population. It is clearly set to become even bigger in the coming years, which means many retailers will be investing less into their stores and more on warehouse operations. And since the cost of sales overall is lower for an e-commerce order - because retail stores are more expensive to run than a busy warehouse - this frees up expenditure to invest in warehouse technology. We anticipate spending on software to improve automation and efficiency to continue increasing.

Online channels are being used to experiment

Retailers will need to find innovative ways to maintain a virtual customer brand experience, because they don’t have the same scope to create an entertaining lifestyle experience away from stores. On the plus side, online retailing offers more scope for customer tracking and greater opportunities for upselling of add on items and repeat purchases than in a store. This means retailers can afford to become more experimental, because they can use their e-commerce channels as a less expensive way to test new lines. Online promotions are far more data driven and therefore more reliable and less risky than in store marketing.

Online propositions need to be perfected

Order fulfilment is very different for online orders and it’s more labour intensive to process individual orders than bulk replenishments. Order fulfilment for retail also needs to become more robust and adaptable, catering for many different order types – direct to consumer, dropship, click and collect or kerbside collection – to deliver the best possible customer service. Building a reputation for service will also help retailers to compete beyond price. It is very easy to lose the customer online because competitors (maybe with lower prices) are just a click away, so they need an extra reason to stay loyal. The overall proposition has to be perfect – excellent service and accurate stock visibility are essential – and is made possible with automation technology like a warehouse management system (WMS).

Communication is critical

Efficient e-commerce supply chain and logistics can result in happier customers, because they can track their items to the doorstep online and get instant shipping or delivery notifications. A good experience, with a convenient returns process, really helps to create a loyal customer and repeat sales. On the flip side, inefficient ecommerce supply chains and logistics can result in even greater reputation loss, because it is very easy to post negative online comments and reviews about customer experience on social media and sites such as Trustpilot and Amazon.

The returns process needs fine tuning

Ecommerce creates the issue of returns management and what to do with stock coming back into the warehouse. Real time back end processes need to be developed to ensure good stock availability management. Dealing with returns efficiently can be especially time consuming without the right processes and technology to support it. Retailers need to ensure that their returned stock availability is as good as it can be, which means fast turnaround times and having items back out for resale in the store or re-listed on websites. Anything less is missing sales opportunities.

Technology vendors support adoption with new pricing models

Our expectation is that supply chain and automation technologies will play a much more important role for retailers now, especially in the warehouse. Businesses knew it was essential before, but now Covid has accelerated adoption rates and brought investment decisions forward. Where businesses can afford the outlay for a new warehouse management software system, they are taking a long-term view. In response, vendors are finding ways to support them financially, with subscription models for on premise software, cloud applications and fixed price, fixed term rental models for hardware.

If you are a retailer and considering how to improve the technology managing key processes in your warehouse, contact Indigo for some expert advice.