Turning Stores Into DCs

The shift in consumer habits of making smaller, more frequent online orders requires apparel retailers to re-design their fulfillment processes to be successful in the omnichannel retail world. This can include building a new distribution center or warehouse, or fulfilling and/or shipping orders from the store. Because consumers expect their orders to be shipped the same or next day to any location for free, retailers' fulfillment processes require a fundamental shift in warehousing and distribution.

This scenario plays out often in the retail environment today: A customer places an order for a sweater online, then stop by the retailer to pick it up, only to find out the store doesn't have the product she'd ordered in stock. She was also told that she couldn't have picked it up at that location because it to be picked up at the store with the same zip code from which she had placed the order.

Uh-oh. The customer had placed the order at home, planning to pick it up at the store location nearest her office. The store associate meekly said "sorry," and the customer stormed out.

Seriously? This particular retailer has several dozen locations statewide. Why should customer pickup be limited to the location nearest the point of order?
The point is that customers still consider the retail store the most reliable place to make, pick up or return a purchase. In-store fulfillment offers an exceptional opportunity to build on and enhance consumer trust and brand loyalty, but only if it's done right. Poorly planned and managed, it has the potential to disappoint, annoy, alienate and, as in the example above, infuriate customers whose experiences don't measure up.

How could a national brand have implemented such a poor solution? At first glance, it makes sense to think that a customer would prefer pickup at the location nearest where they are. But that's not how omnichannel retail works. You must be able to accommodate customers wherever they are, whenever they're ready. In planning its in-store strategy, the retailer clearly didn't think through the range of pickup options its customers might prefer. In addition, consider these scenarios:

The business traveler who places her online order from the airline gate, with the intent to pick it up on arrival at her destination city
A parent who places an online order for her daughter to pick up at a location near the university she attends
A small-town shopper who plans to pick up her online order during an upcoming shopping trip into the city.

None of these seem far-fetched, yet none would be possible under this retailer's narrowly restricted system. What were they thinking?

Now that we've covered the nightmare scenario, what kind of benefits should you expect from a well-crafted in-store fulfillment strategy? Here are some important points to consider:

System-wide inventory visibility: A good in-store fulfillment solution makes all inventory visible across all locations and channels. Wouldn't the unhappy sweater customer have been somewhat placated if the associate had been able to find the item she'd ordered in stock at another location and arrange to have it delivered to her wherever she preferred? Wouldn't it have been better still if she had been able to confirm availability at the time she placed her order?

Greater customer engagement and satisfaction: More than half of customers consider it important to be able to buy online and pick up in the store. Retailers must be able to deliver on these consumer preferences. They key word here is deliver. Once you make the promise, seamless delivery is critical.

Increased sales, cross-sells and upsells: A customer who has a pleasant experience picking up an order is more likely to also browse in the store and make additional purchases.

Enhanced brand loyalty: Building and retaining shopper loyalty is increasingly difficult now that it's so easy to showroom and shop around. By providing an easy and convenient face-to-face pickup experience, retailers can gain consumer trust and strengthen brand identity.

Redefining the store for in-house pick-up
Brick-and-mortar apparel retailers need to accept that e-commerce is here to stay and they need to embrace its success. Many retailers find they have more real estate than they know what to do with. Per Forrester Research, if U.S. retailers continue to ignore the omnichannel mindset, they will experience a 28 percent decline in earnings. By welcoming omnichannel and optimizing their store operations for e-commerce, they gain 18 percent in earnings. Because people still want to touch and feel that sweater or try on a pair of jeans before purchase, brick-and-mortar stores are here to stay. Move your retail store into the omnichannel world:
  • Gain visibility into inventory in real-time, across all channels. Fulfillment managers have to be aware of the inventory level at all stores and the sales record for each product at all stores. The Men's Wearhouse estimates that it saves more than 1,000 orders per day by leveraging inventory from other stores to fulfill demand when a local store is out of stock.
  • Create a workflow process and add technology to pick, pack and ship from stores. Integrate this technology across all channels so inventory levels can be adjusted when an order is picked and packed. For example, RFID tags can help with item-level tracking.
  • Train staff to take on new roles. As store associates take on new roles combining sales, fulfillment, returns processing, and customer service, it is important to have clearly-defined processes, training, feedback, and measurable standards.
  • Pay incentives to fulfill orders correctly. Per a recent Forbes article, "Peter Glenn employs one staffer at each store to fulfill web orders, regularly keeps store managers up to date on the latest fulfillment techniques, and bases store managers' bonuses in part on the accuracy of shipments from stores."
  • Flexibility in fulfillment. Stores need to be able to establish processes to handle store replenishment shipments, vendor drop-shipments, store-to-store transfers, customer special orders, etc. The store must be able to receive shipments by truckload, case, carton, or single item, so flexibility is key.
  • Measure progress and performance. Measure actual times for picking, packing, etc., to establish a baseline. Collect and analyze activity times to establish key performance indicators. Adopt new processes and procedures based on outcomes to better serve customers.
  • Customers want convenience. Make the area where customers pick up orders easy to find and train the staff to be friendly and helpful.
Brick-and-mortar retail stores are here to stay but have taken on different roles by adding distribution center-like capabilities. It's not easy, but to remain competitive, it is a requirement. Enabling appropriate fulfillment processes, building the right physical infrastructure, and empowering the workforce with training and technologies will help apparel retailers turn their stores in DCs to meet the challenges of the omni-channel environment.

Chris Castaldi is the director of business development, W&H Systems.

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