Are You a Retail Winner?
Omnichannel retailing has been the dominant business challenge for the apparel industry for several years now – and apparel retailers and their suppliers have been challenged to keep pace.
For the first time, many retail companies believe they are effectively executing on their omnichannel initiatives, according to the fifth annual retail industry benchmark survey conducted by Retail Systems Research (RSR) on behalf of SPS Commerce. A key takeaway from the research is that omnichannel retailing, which started as a standalone initiative, is now becoming a mainstream foundation for broader business strategies focused on meeting consumers' changing shopping expectations.
According to the research report, "Retail Insights: Moving Beyond Omnichannel," more than 35 percent of retailers believe their omnichannel execution is on track, up nearly 200 percent year over year. More than 45 percent of respondents cite sales growth from existing omnichannel efforts as a key factor in accelerating change. What's more, companies that reported their progress was lagging declined 9 percent year over year.
The report also revealed the ongoing impact of changing consumer expectations, with 75 percent of respondents citing this as a top factor driving their business over the next five years.
This is especially true when it comes to delivering the seamless, personalized, cross-channel experience consumers expect. No wonder so many companies see significant opportunity in growing e-commerce sales: more than 60 percent of all retailers, distributors and suppliers rank this as their number-one priority for 2017. It's also worth noting that last year's survey was the first year that respondents ranked e-commerce a higher priority than physical stores.
Product availability is still important, though it's interesting to note that only 48 percent of retailers view this as an important factor compared to 55 percent of suppliers and 60 percent of distributors. The most likely reason for this difference is because apparel retailers have already been aggressively pursuing cross-channel fulfillment.
As a result, retail sales no longer depend on their ability to stock store shelves. With increased collaboration between suppliers, stores, distributors and logistic service providers (LSPs), the attention is now on shipping.
This is without a doubt the result of the Amazon effect and other online-only retailers. Thanks to them, consumers now expect free shipping fast, which is why 42 percent of retailers view free shipping as an important differentiator, and 24 percent view faster shipping as one as well.
Retail winners
New this year, the survey identified the key practices of "retail winners," companies growing 50 percent faster than the rest of the market with annual sales growth of 4.5 percent or more.
The report revealed that winners pay more attention to three factors: expanding their brand awareness across all channels, driving a strong internal culture and collaborating with supply chain partners. Retail winners also tend to distinguish strongly between goals and what it takes to reach goals, prioritizing actions rather than outcomes.
Retail winners are also driven somewhat less by competitive pressures than others. Yet surprisingly, winners are more dependent on executive mandates, by a factor of 53 percent to 33 percent. Winners also tend to be more forward-thinking overall. Retail winners are keenly aware of the need for speed with 50 percent of winners offering two-day delivery and two times more likely to have same-day delivery.
Other key trends that emerged from this year's report include:
Peter Zaballos is senior vice president and chief marketing officer of SPS Commerce, a retail cloud services platform provider.
For the first time, many retail companies believe they are effectively executing on their omnichannel initiatives, according to the fifth annual retail industry benchmark survey conducted by Retail Systems Research (RSR) on behalf of SPS Commerce. A key takeaway from the research is that omnichannel retailing, which started as a standalone initiative, is now becoming a mainstream foundation for broader business strategies focused on meeting consumers' changing shopping expectations.
According to the research report, "Retail Insights: Moving Beyond Omnichannel," more than 35 percent of retailers believe their omnichannel execution is on track, up nearly 200 percent year over year. More than 45 percent of respondents cite sales growth from existing omnichannel efforts as a key factor in accelerating change. What's more, companies that reported their progress was lagging declined 9 percent year over year.
The report also revealed the ongoing impact of changing consumer expectations, with 75 percent of respondents citing this as a top factor driving their business over the next five years.
This is especially true when it comes to delivering the seamless, personalized, cross-channel experience consumers expect. No wonder so many companies see significant opportunity in growing e-commerce sales: more than 60 percent of all retailers, distributors and suppliers rank this as their number-one priority for 2017. It's also worth noting that last year's survey was the first year that respondents ranked e-commerce a higher priority than physical stores.
Product availability is still important, though it's interesting to note that only 48 percent of retailers view this as an important factor compared to 55 percent of suppliers and 60 percent of distributors. The most likely reason for this difference is because apparel retailers have already been aggressively pursuing cross-channel fulfillment.
As a result, retail sales no longer depend on their ability to stock store shelves. With increased collaboration between suppliers, stores, distributors and logistic service providers (LSPs), the attention is now on shipping.
This is without a doubt the result of the Amazon effect and other online-only retailers. Thanks to them, consumers now expect free shipping fast, which is why 42 percent of retailers view free shipping as an important differentiator, and 24 percent view faster shipping as one as well.
Retail winners
New this year, the survey identified the key practices of "retail winners," companies growing 50 percent faster than the rest of the market with annual sales growth of 4.5 percent or more.
The report revealed that winners pay more attention to three factors: expanding their brand awareness across all channels, driving a strong internal culture and collaborating with supply chain partners. Retail winners also tend to distinguish strongly between goals and what it takes to reach goals, prioritizing actions rather than outcomes.
Retail winners are also driven somewhat less by competitive pressures than others. Yet surprisingly, winners are more dependent on executive mandates, by a factor of 53 percent to 33 percent. Winners also tend to be more forward-thinking overall. Retail winners are keenly aware of the need for speed with 50 percent of winners offering two-day delivery and two times more likely to have same-day delivery.
Other key trends that emerged from this year's report include:
- Order fulfillment execution continues to be difficult due to dramatically increasing order volume and complexity, with 55 percent of respondents expecting expanded assortments, 53 percent expecting increased online orders and 43 percent expecting increased item attribute sets in 2017.
- Forty percent of respondents plan to increase their network of drop-ship vendors.
- Legacy systems remain a top factor hindering omnichannel execution, with 29 percent of companies identifying legacy systems as their top obstacle this year.
Peter Zaballos is senior vice president and chief marketing officer of SPS Commerce, a retail cloud services platform provider.