Consumers are returning to stores, but their expectations for e-Commerce has gone up

Mar 03 2023

There have been so many changes in recent years in the retail vertical. After years of dramatic shifts to online consumers are returning to stores. But now they want it all – great instore experiences and amazing online shopping experiences. And retailers need to be able to manage it all – where should you focus?

Even prior to the pandemic, brick and mortar stores were closing down at record levels and the number of people working in the industry was on the decline. Dubbed the retail apocalypse, over 9,300 stores closed in the United States in 2019, and many popular department stores, like Target, found themselves needing to pivot focus toward online sales.

As many countries started grappling with lockdowns from 2020, eCommerce sales surged by 43%. Emerging post-pandemic, consumers are returning to stores, and retailers are enhancing the in-store shopping experience; but the reality is that consumer expectations of online shopping has been permanently impacted.

Even when people choose stores, succesful e-Commerce is vital

In Mckinsey’s report on sentiment and consumer behavior, 60-70% of consumers are now used to shopping in an omni-channel way – instore and via a range of digital channels, with social media influencing all age groups, particularly younger users.

Compounding this, the study revealed that when over 60% of consumers experienced out of stock items, 39% switched brand or product, and 32% switched retailers in favor of order fulfillment. For many consumers, the post-purchase experience matters just as much as the initial buying step, preferring those products or retailers with stock, and a fast turnaround.

With the heightened consumer expectations of how well online shopping serves their needs even while they return to stores, it’s unsurprising that 3rd party logistics providers, warehouses and retailers alike are preparing for sustained e-commerce challenges.

 Free delivery is out: fast, accurate delivery is in.

With delivery options becoming the differentiator, retailers have a newfound opportunity to improve brand loyalty through improving the experience, rather than compensating it. Research reveals that 65% of consumers would be willing to pay more for faster, more reliable deliveries, and 75% of shoppers admit that the delivery reliability of a retailer would impact their willingness to shop with them in the future.

In the first week of 2021, UPS accepted 1.75 million returns into its system every day. This volume can be crushing to retailers and 3rd party logistics providers. Processing online returns can add $10-$20 per item to the bottom line. For smaller items that cost less than $20, it can actually lead to a loss to take the item back.

The omni-channel challenge

Despite the pre-pandemic speculation of brick-and-mortar retail becoming nothing more than a nostalgic throw-back to a time when we didn’t live through a 6-inch screen — consumers seem to be embracing the omni-channel. Leading retailers have blended physical and online channels to engage consumers in the channel of their choosing.

Ikea’s omnichannel strategy recently made the brand one of the most valuable retail brands, worldwide. Consumers can shop, or click-and-collect from in store, pick-up direct at the warehouse, and receive delivery — creating enormous complexity for warehouse operations. But as a customer from the outside looking in, the entire process appears far more simple than their furniture assembly.

The answer is in the data.

When reviewing the data, it becomes apparent: the customer experience, brand loyalty and cost efficiencies are intrinsically linked to warehouse operations.

Omni-channel retailers and fashion brands need software that empowers quick response to supply chain disruptions with fast, data-driven decisions. Solutions powered by machine learning allow organisations to bring precision to every point of the supply chain with AI that can sense, predict, and fulfill demand based on real-time market data. When using a technology infused with the latest innovations in data science, retailers gain a modern, sophisticated approach to demand forecasting, merchandise financial planning, lifecycle pricing, assortment planning, and replenishment optimisation.

Transformation must occur across the entire supply chain, not just in the consumer-facing touchpoints. From manufacturing to distributor to warehousing, logistics, and distribution— end-to-end visibility is what builds a strong and profitable network.

About ComActivity

The ComActivity team are supply chain and warehouse experts.  We have deep hands-on experience with improving process and technology in a diverse range of settings – from smaller warehouses for growing SME’s to large greenfield sites for multinationals. The team’s industry experience covers a range of sectors including food & beverage, retail, automotive, electronic, building supplies and pharmaceuticals.

To learn about ComActivity and how our solutions help build effective and efficient operations, visit www.comactivity.com.au

We write about Infor technology, ERP & Cloud news plus host the occasional Webinar.

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