In the last two decades, consumer habits and desires have changed enormously, forcing retail to evolve as well. In the early 90s, Brazilians were used to having a limited range of brands and products on the market. However, with the economic stabilization that took place in 1994 and the fall of customs barriers in Brazil, the panorama changed. The domestic motorsport market is an example of this. If in the past Ford, GM, Volkswagen and Fiat were responsible for almost all vehicles sold in the country, it is now common to see cars from more than 20 different brands on the streets.
All this globalization and the revolution brought about by the advent of the internet have empowered the consumer who, faced with new options and with information in the palm of his hand, has become more enlightened and demanding. To keep up with it, retail had to reinvent itself. From only one channel available for contact with the customer – the physical store, nowadays it is possible to interact with companies through the website, application, telephone, email and social networks, among others. Just choose.
The modern consumer, however, wants this relationship to be fluid between all channels and the shopping experience to be unique, that is, if when searching the internet for a product and then deciding to purchase it in the app, it is to be expected that the item is already there in the shopping basket waiting for it. If the size is incorrect when the product arrives at his house, he can go to the nearest store and exchange it for another size. This situation illustrates the reality today desired and sought by world-class retailers: the omnichannel, a barrier-free integration of all the channels that the store has, with the customer at the center of everything.
To reach this stage, one of the main challenges for retailers is to obtain total and integrated visibility of their stock, that is, to see the quantity of each product existing both in the DCs and in the stores. In addition to facilitating the company's inventory management, the visibility of the products in the chain allows for a better response to demand and reduces the risk of promotions and loss of margin in inadequate SKUs.
A case of success among retailers that have already managed to obtain inventory visibility is the North American department store Macy's. Known as Pick to the Last Unit or P2LU, the program allows a retailer to list products for sale online even when there is only a single item available in a store. This is possible thanks to RFID tags (Figure 1) inserted into the products by the suppliers themselves, which allow parts to be tracked and monitored not only along the chain, but also in the store itself using handheld readers.
For consumers the advantage is also huge. Through the Macy's website, the customer can see in which stores, within a radius of 5 to 100 miles, he can find the desired product, in the preferred color and size (Figure 2). This makes it possible for them to try on the desired piece before buying or even gain time on receipt by buying on the website and picking it up at the store, extremely important requirements to guarantee a unique shopping experience for the consumer.
Figure 1 – Example of customer viewing product availability at Macy's stores
Source: Macy's
The program, which started from a small-scale pilot in 2008, is now implemented in hundreds of stores and covers different segments of the company's products. In addition to increasing sales, the company claims to have reduced its inventory by more than a billion dollars, mainly as a result of the sale of products up to the last unit. These items account for about 15 to 20% of Macy's inventory and are generally not sold by companies due to lack of confidence in inventory counts. With the P2LU program, however, the story has changed.
Achieving this inventory visibility is no easy task. In addition to investing in technology, a well-structured process is needed to ensure that, for example, there will be no problems with the online sale of a piece of clothing that was in the hands of a consumer, but had not yet been written off in stock or an order made. pre-booking. These, however, are challenges that need to be overcome if the company's desire is to become omnichannel. And, more and more, this desire is becoming an obligation. So retailers, get to work!
To learn more about these and other omnichannel challenges and see how large companies are addressing these challenges, join the International Supply Chain Forum 2017, which will have “Execution of the Omnichannel Strategy” as one of its verticals.
References
<http://www.ezcommerce.com.br/blog/ez-school-2/os-10-desafios-de-uma-estrategia-omnichannel/>
<http://www.rfidjournal.com/articles/view?13990/>
<http://www.fierceretail.com/operations/macy-s-finds-omnichannel-success-rfid>
Fernanda Monteiro
More than 11 years of experience in training and consultancy projects, focusing on Logistics and Supply Chain. In consultancy, he carried out projects such as Transformational Logistics Plan, Diagnosis of logistics operations, Strategy and Calendarization of Transport Operations, Measuring the Cost of Serving, Market Study, Mapping of Inventory Reduction Opportunities, Review of the S&OP Process, Management Plan Training and Implementation of Commercial Processes in companies such as Nestlé, Raia Drogasil, Ipiranga, Lojas Americanas, B2W, Coca-Cola, Andina, Embraco, Martins Atacado, Loja do Mecânico, Santo Antônio Energia, Ecoporto and Silimed. She is currently one of the teachers of the Inventory Management Course taught every six months by ILOS. She worked on the development and management of Online Courses in Logistics and Supply Chain, Supply Processes, Demand Planning, Inventory Management and Industrial Management. Still in the training area, she was responsible for applying ILOS business games in companies such as Raia Drogasil, Fibria, NEC, Novartis and Moove.
