Why intelligent retail logistics is vital to the survival of retail

By choosing to ignore the benefits offered by a digital presence, retail stores have steadily lost ground to their online rivals. In this new reality, the difference between success and failure lies in retail logistics.

Why intelligent retail logistics is vital to the survival of retail

Monday March 23, 2020,

5 min Read

The rise of e-commerce is a paradigm shift that’s benefited practically every party on the retail spectrum. Sellers of all stripes—from individuals and home-grown businesses to multinational corporations—have been quick to take advantage of the flexibility and ease of operations online storefronts offer. E-commerce businesses the world over have boomed by providing an easily accessible platform to sellers, leading to the rise of global giants such as Amazon and eBay.

And more than anyone it is the end customer who has emerged the undeniable winner in this new world order. With a galaxy of products just a click of a button away, a host of competing online retailers to choose from, year-long discounts and sales, and an array of other advantages, the consumer has never been in a better position.

intelligent logistics

But the one party that hasn’t benefited from these changing times, and has instead suffered in its wake, are retail businesses. The retail sector in India is dominated by two distinct segments. On the one hand are the large retail players; comprising both local and multinational players, these brands boast a nationwide presence and multiple storefronts per city, such as the Reliance chain of stores, Oppo, Nike, and so on.

On the other hand, are the neighbourhood mom-and-pop stores and kiranas – approximately 12 million of them. While the revenue stream of each of these individual stores is limited, their combined clout is undeniable. Cumulatively, they control over 90 percent of the retail market, currently valued at $700 billion.

As India has continued down the path of digital connectivity, online storefronts have broken the stranglehold once enjoyed by these businesses. By choosing to ignore the benefits offered by a digital presence, retail stores have steadily lost ground to their online rivals. And as time passes by, the disparity in power between online and offline brick-and-mortar stores is only set to grow wider.

In these changing times, brands need to adapt technology to their retail operations as well if they hope to survive. And in this new reality, the difference between success and failure lies in retail logistics. In its simplest terms, retail logistics is the process of managing the flow of merchandise from the source of supply to the customer. With online competition squeezing margins ever tighter and e-commerce efficiencies and discounts leading to cost pressure, never has an optimised logistics system been more vital.

Towards that end, brands with retail businesses need to keep the following considerations in mind:

Meeting elevated expectations

The demands consumers have of retail experience have irrevocably changed over the last decade. There has been no greater driver of this change than the ‘Amazon effect’. With features such as one-click ordering, free shipping, prompt delivery, and extraordinary customer service, Amazon has reshaped shopping in its entirety, and permanently heightened the expectations the public have of the experience.

If retail stores of brands are to compete with these offerings, the need to develop highly flexible supply chains is vital. By working alongside logistics services, companies can work towards reshaping their core efficiencies to meet the public’s expectations.

To that end, understanding your customer’s needs, their purchasing habits, and their locations are key, and enable the creation of a fulfilment strategy. By compiling all of this information into a wider logistics framework, retail stores can offer the same conveniences as their online competitors, including multiple delivery options, loyalty discounts, and improved customer service.

Supply chain visibility

At a point in time, brands viewed their retail supply chain logistics as a black box – vital to the day-to-day functioning of their franchises, but beyond their comprehension. Once the order to restock the store was placed, the only update the retailer would receive was upon the arrival of the product.

Simpler times they may have been, but no longer feasible in an era of tight margins and intense competition. In order to ensure the smooth functioning of a retail chain establishment in today’s era, a transparent supply chain and real-time notifications are a must.

That’s where retail logistics services come in – by overseeing the shipment process from start to finish, they can flag and resolve supply chain delays, ensure that shipments are not misplaced, and automate the delivery placement and scheduling process. A positive delivery experience also serves to deepen the ties between retailer and brand, and ensures that the retailer doesn’t waste valuable time and resources checking on the status of their order.

Omnichannel offerings

E-commerce has made its mark on the world, and it’s here to stay. And while that proclamation may seem dire for retail business, it should instead be viewed as an opportunity, for the future of shopping lies in an omnichannel experience – one that allows a customer to move between the online and offline worlds seamlessly. It’s already happening; customers can scroll through products on their smartphones and add them to their cart, complete the transaction on their desktop, and then opt to drop by the store to pick up their product. Flexibility and cross-platform functionality are the newest frontiers, and brands whose retail stores implement these systems stand to benefit greatly.

However, switching to this new model also raises the issue of feasibility. Very few brands have the capacity or the expertise to implement this sort of a model, particularly if their inventories have separate supply chains. In these instances, on-boarding a supply chain logistics service can mean the difference between success and failure. With their help, brands can confidently expand their scope of retail businesses offerings with a unified and consistent retail experience across every retail channel, while solidifying and expanding their client base in the process.

(Edited by Evelyn Ratnakumar)

Lokesh Kumar is the VP-Business Development of Clickpost