Trends in U.S. retail sales are very interesting. In 2012, total U.S. retail sales were $4.3tr. By 2022, this number is expected to increase to $5.8tr. In comparison, total online sales are expected to increase from $224bn in 2012 to $1.4tr in 2022. Looking at two of the biggest players"”Amazon and Walmart"” these companies' combined in-store sales will go from $286bn in year 2012 to $984bn in 2022.
However, looking at in-store sales minus all online sales, and minus the Amazon and Walmart in-store sales, that number begins at $3.9tr in year 2012, and basically remains flat for the next few years; it will go up to about $4tr in 2019. But, in 2019, it starts to fall, and it is expected to be $3.5tr in 2022.
This means that in-store sales are at peak now. These sales will level off for the next three to four years, and then they'll fall. Any company relying only on in-store sales has a real problem. It's time to start thinking like a titan: develop an approach beyond single channel.
The next place retail companies will look is online. If companies are only seeing 7 percent to 8 percent of their revenue, why are online sales important? The fact is, it's not about how much is sold online; it's the total impact of online.
In 2012, 50 percent of all sales were influenced by online, social and e-commerce - increasing to 65 percent in 2022.
The influence of online is huge for all retailers. Looking at the acquisition of new customers, Nordstrom has said that 83 percent of their new customers first visited online before coming to the store.
The titans are on the offensive. A counter-attack alone will not be successful. These companies need to up their game to a higher level by establishing a counter-offensive. The best definition of a counter-offensive is a large-scale offensive undertaken by a defending company to seize the initiative from the attacking company. This means the company is going to go after the titans, not just sit back and wait to respond. They are going to attack back.
There are five elements of a counter-offensive. The first three are customer-facing: what to do with omnichannel, what to do about store fulfillment, and what do we do about same-day delivery. The last two are more about what do to with the company's supply chain: what to do about creating excellence in planning-execution, and understanding the impact of demand-driven value networks. Overall, these elements can make supply chains very agile, highly responsive, and capable of meeting the requirements of the customer at a minimal cost.
There is no denying that the most successful companies in the future will have a cross-channel, multichannel, omnichannel approach"”along with other elements listed in the above section. The companies building their business and supply chain strategies the right way will join the arena of the titans.
Enjoy curated articles directly to your inbox.