National retailers are like big ships — they take time to change course. Just ask the consultants sometimes tasked with gripping the wheel.
"You know it's hard to turn the big ship, right? But when all of a sudden your revenue stops, man there's a lot of motivation," Chris Shaw, the senior director of product marketing at Manhattan Associates, told Supply Chain Dive.
From Home Depot to Kohl's to Michaels, retailers have launched and expanded omnichannel services at a historic clip over the last three months. Before the pandemic, rolling out a new omnichannel service could easily take a year, Shaw said.
"In just 45 days, we set the foundation for Michaels' next chapter as an omnichannel retailer," Michaels CEO Ashley Buchanan said on an earnings call in early June. The crafting retailer launched curbside pickup and same-day delivery in April and expanded the number of stores that ship e-commerce orders to 80% of the fleet — essential services during the roughly two months when most U.S. retail stores were closed to the public.
Kohl's CEO Michelle Gass called her team's efforts to advance omnichannel operations a "step change" for the retailer. The company fulfilled 40% of e-commerce orders from stores in the first quarter through curbside pickup and ship-from-store. The programs scaled in a "matter of weeks." And Home Depot moved its store pickup option out to the curb in just days.
"Retailers have lived three years in three months through this pandemic," Christina Boni, a senior analyst at Moody’s, told Supply Chain Dive. The lightning-fast ramp-ups create a contrast to the measured rollouts and tentative pilot projects retailers usually perform when entering new order fulfillment territory.
The longevity of these programs, however, and their survival through what may be a unique peak season will be determined by the inventory management practices, data quality and digital tools they are built on.
New challenges encourage fresh eyes
Curbside has not always been attractive to retailers, many of which were reticent to offer consumers more opportunities to avoid coming into the store.
"Typically there's been an economic benefit to people coming into the store … when someone goes to the store they’re more likely to buy something else. Typically there is an add-on purchase effect," Boni said. But with nearly no choice, retailers jumped past the usual hoops of trials and testing.
"Retailers have lived three years in three months through this pandemic."
Senior Analyst, Moody's
Curbside pickup is, after all, literal just a few steps away from buy online pickup in-store (BOPIS). The picking process is the same, but store staff need an efficient way of determining when and where the cusomter will be in the parking lot to drop the goods. Still, few retailers outside of the grocery space offered it pre-pandemic.
Sean Seraphin, senior director of omnichannel at Radial said he converted one customer’s BOPIS program into a simple curbside pickup program in two days.
"Dependent on how mature and how sophisticated you want that curbside pickup interaction experience to be for that consumer, it could be certainly much longer," Seraphin said. "Do you want them to be able to identify their vehicle? Do you want to have SMS messaging in place and so forth."
But a ramp-up that quick, with fairly manual customer communication, suggests the retailer was starting far from zero. Gamestop CEO George Sherman made the same connection on an earnings call in June.
"Our ability to [launch] curbside delivery was built directly off of our buy online pick up in-store capability," Sherman said.
But not all retailers had an existing BOPIS program when curbside became an essential service. Five Below CEO Joel Anderson called the discount retailer's new curbside pickup program "scrappy" on an early June earnings call.
"I think the real learnings from curbside is it just showed us how fast we can really move when pressed," Anderson said. "Obviously, we didn't have really any BOPIS capabilities going into this."
And Five Below is not alone. In a 2019 National Retail Federation (NRF) Survey conducted by Forrester Research, less than a third of retailers had BOPIS in place before 2018.
Peak will reveal the data haves and have-nots
Without an existing BOPIS program, or the technology to manage order fulfillment from multiple nodes, scaling curbside pickup, and even the somewhat simpler ship-from-store, is going to be a challenge, according to the experts.
With enough elbow grease, any retailer can run a manual ship-from-store or curbside program. Orders would be passed around via email or printed out and handed to employees to pull and pack. Customers arriving for pickup would call or text a central number with their car details. But a manual back-end process will often lead to a manual and less sophisticated consumer experience
"You can manage workarounds with volumes of 10 orders a day, right?" Shaw said. "But what we found is for the retailers who realize they had the systems in place and inventory management ... They just cranked it up and turned it on."
"If you don't have enterprise-wide inventory visibility, you're kind of dead in the water."
Senior Director of Product Marketing, Manhattan Associates
A well-maintained order management system could enable all of these omnichannel necessities, said Shaw, as long as the inventory fidelity is high and the team trained up on how to turn on new fulfillment channels and fine-tune the max fulfillment capacity across hundreds of stores.
"Having inventory authority is building block number one. If you don't have enterprise-wide inventory visibility, you're kind of dead in the water," Shaw said.
Ship-from-store is somewhat more forgiving of inventory inaccuracies, Seraphin said, since the customer isn’t standing, or sitting in a car, in front of the store. But optimizing from where an item ships to avoid in-store stockouts as some stores reopen and to avoid split shipments is still desirable. Curbside, though, creates high stakes for inventory fidelity.
"It comes back to understanding where inventory is and where is the optimal place to pick it from. Retailers more and more have to be algorithmic to figure out the optimal place the inventory should come from," Boni said.
The experts expect that those retailers running new omnichannel services the hard way — without tailored tech tools — are likely working on acquiring those tools right now. With peak season in view and the virus still a factor, the importance of robust omnichannel infrastructure will only grow and the bar may rise as well. As U.S. consumers grow more accustomed to pandemic conditions, the expectation of speed for curbside pickup — the time between click and collect — may rise, Seraphin said.
"There's certainly a demand for the most expedited ability to get the product in the consumer's hand. So definitely during peak, you're going to want to be able to do that," Seraphin said. "Here's the thing: Nobody knows either way, so you better be ready to do all."
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