Executive Briefings

Three Trends Transforming Retail: Big Data, Direct-to-Store and Omnichannels

Andrew Roszko, senior vice president of sales at Descartes, explains how three interrelated trends - big data, direct-to-store shipping and omnichannels - are transforming retail.

Retailers have access to more consumer data than ever before, but it is their ability to analyze and use this "big data" for competitive advantage that separates leaders from laggards, says Roszko. "A really hot topic with retailers right now is how to bring all this data together into one place in order to do the analytics that will enable bypass distribution centers. To illustrate, Roszko posits a small format retailer with a large number of stores that is bringing goods into North America from China. "Traditionally, the retailer would import to a port, then move the goods to its own DC and then on to stores," he says. "But what if the retailer can leverage data to push the process upward in the supply chain, so that the decision can be made in China about what products are going to which store? Then, its vendors can print the labels in China and the goods can go directly from the port to the stores. They bypass their DC and the associated inventory carrying costs, so this is a terrific opportunity for cost savings. And because they can be more nimble with the stores and get the goods to them faster, they them to be more nimble," he says.

One way shippers are using this data to increase their supply chain agility is by figuring out how to ship direct to stores and reduce their out-of-stocks," Roszko says.

Another trend being supported by big data is the use of multiple channels through which consumers can purchase and return goods. Thanks largely to Amazon.com, customers expect very rapid home delivery of purchased goods, says Roszko, "so there is a lot of focus around how to cost-effectively get goods to people quicker and provide a better customer service experience."

One of the advantages that traditional brick-and-mortar retailers have is their store and DC infrastructure, including many stores big enough to act as a mini DC, he says. They can leverage these assets along with an online channel to give customers a more Amazon-like experience.

"The best example of this strategy that I have seen is a store call the John Lewis Partnership in the UK," says Roszko. "This is a $3.5bn retailer of furniture, appliances and the like that has significantly grown its online sales." Roszko says the company deployed technology that enables customers to go online and buy an appliance, then immediately pick a two-hour time slot within the next couple of days for home delivery. "They have increased sales substantially - by  tens of millions of dollars per year - by offering that great experience," he says. In addition to increasing sales revenue, the technology was deployed in such a way that the company also decreased distribution costs by about $1 a mile or $3m a year, says Roszko. "So this company is leading the market by building out its e-commerce framework and focusing heavily on an excellent customer experience - and it is reaping the rewards."

Descartes provides the John Lewis Partnership with the scheduling and route optimization software used in this solution. "Descartes is the logistics software in the background that is doing the optimization to offer up those profitable two-hour time slots," says Roszko. "We enable them to offer a great customer service experience and reduce costs at the same time."

To view the video in its entirety, click here

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Retailers have access to more consumer data than ever before, but it is their ability to analyze and use this "big data" for competitive advantage that separates leaders from laggards, says Roszko. "A really hot topic with retailers right now is how to bring all this data together into one place in order to do the analytics that will enable bypass distribution centers. To illustrate, Roszko posits a small format retailer with a large number of stores that is bringing goods into North America from China. "Traditionally, the retailer would import to a port, then move the goods to its own DC and then on to stores," he says. "But what if the retailer can leverage data to push the process upward in the supply chain, so that the decision can be made in China about what products are going to which store? Then, its vendors can print the labels in China and the goods can go directly from the port to the stores. They bypass their DC and the associated inventory carrying costs, so this is a terrific opportunity for cost savings. And because they can be more nimble with the stores and get the goods to them faster, they them to be more nimble," he says.

One way shippers are using this data to increase their supply chain agility is by figuring out how to ship direct to stores and reduce their out-of-stocks," Roszko says.

Another trend being supported by big data is the use of multiple channels through which consumers can purchase and return goods. Thanks largely to Amazon.com, customers expect very rapid home delivery of purchased goods, says Roszko, "so there is a lot of focus around how to cost-effectively get goods to people quicker and provide a better customer service experience."

One of the advantages that traditional brick-and-mortar retailers have is their store and DC infrastructure, including many stores big enough to act as a mini DC, he says. They can leverage these assets along with an online channel to give customers a more Amazon-like experience.

"The best example of this strategy that I have seen is a store call the John Lewis Partnership in the UK," says Roszko. "This is a $3.5bn retailer of furniture, appliances and the like that has significantly grown its online sales." Roszko says the company deployed technology that enables customers to go online and buy an appliance, then immediately pick a two-hour time slot within the next couple of days for home delivery. "They have increased sales substantially - by  tens of millions of dollars per year - by offering that great experience," he says. In addition to increasing sales revenue, the technology was deployed in such a way that the company also decreased distribution costs by about $1 a mile or $3m a year, says Roszko. "So this company is leading the market by building out its e-commerce framework and focusing heavily on an excellent customer experience - and it is reaping the rewards."

Descartes provides the John Lewis Partnership with the scheduling and route optimization software used in this solution. "Descartes is the logistics software in the background that is doing the optimization to offer up those profitable two-hour time slots," says Roszko. "We enable them to offer a great customer service experience and reduce costs at the same time."

To view the video in its entirety, click here

Keywords: supply chain, it supply chain, supply chain management, it supply chain management, supply chain management it, supply chain management scm, inventory management, inventory management it, transportation management, logistics management, logistics & supply chain, supply chain solutions, logistics it solutions, supply chain systems, transportation management systems, retail supply chain