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Rob Shaw, MD EMEA at Fluent Commerce

Customer Experience & Profitability: It’s not a balancing act – have both!

Rob Shaw, MD EMEA at Fluent Commerce discusses how Omnichannel vendors must act now to streamline their physical and digital user experience to encourage customers back in stores or face loosing out

Omnichannel fulfillment has increased rapidly in the UK as retailers respond to the massive shifts in both consumer demand and the impacts on supply chains caused by the Covid-19 crisis. However, with big name brands like Cath Kidston, Oasis and Laura Ashley closing their doors this year, retailers with a High Street presence will have to adapt fast if they are to continue to delight customers as shoppers once again venture back in-store.

The events of recent months have ushered in, a growing expectation that retailers will harmonise their digital and physical channels into a unified and cohesive environment that makes it easy for shoppers to move seamlessly across channels. Picking up exactly where they last left off at every point of the shopping journey, regardless of where they are shopping – and how.

To stay competitive, and profitable, retailers will need to take action to improve order margins and enable the best possible experiences for high value customers. Fine tuning their operations to generate incremental improvements that protect and improve in-store experiences, reduce reliance on markdowns, and make it cost-effective to introduce omnichannel fulfillment options that resonate with today’s time pressed – and ever more demanding – customers.

In response to the growing need for fulfillment agility, a growing number of retailers are already using their stores as mini distribution centres with dedicated staff undertaking pick and pack activities. But initiating new fulfillment and distribution models should not come at the cost of compromising the in-store experience, to ensure staff still spend the same amount of time servicing customers in store.

Preserving the in-store experience
Protecting the in-store experience for customers will be critical, especially at flagship locations where stock-outs of top moving lines will potentially generate negative customer emotions and lost sales. To counter this, retailers will need to set higher buffer levels that protect supplies to flagship stores. Or make it easy to source from non-flagship stores and move stock quickly from lesser performing locations.

Preserving the in-store experience means store capacity will need to be tightly managed, using order management rules that limit the number of Click and Collect and/or Ship to Store orders that are sent to an individual store according to total orders per day. For example, once a store has exceeded a certain number of open orders, only Click and Collect orders – and not Ship from Store orders – are sent to the store. These automated rules will ensure that stores always receive a manageable flow of orders, so staff have the time and resources to service their in-store customers.

This level of flexibility should also apply to product selections. Having the ability to add or remove products or product categories at a store level will help prevent poor customer experiences or returns. For example, if a store in one location is impacted by a local flood that damages stock, customer orders can be quickly fulfilled from another nearby store.

Fine tuning inventory to reduce markdowns
To reduce markdowns that erode profitability, retailers that have distributed order management software in place can evaluate a wide range of variables to determine if it is better to source from locations with the highest markdowns in a given store. Or select stock from stores with the most inventory, or the lowest sell through rate, or the oldest inventory.

Retaining high value customers
Delivering an exceptional customer experience is the key to maintaining and growing the loyalty of high value customers. Omnichannel retailers have the unique advantage of being able to leverage their stores to offer a highly differentiated VIP experience. This may include restricting the availability of selected inventory to customers, based on their loyalty status. Or giving VIPs exclusive or early access to buy first before the larger inventory pool is made available to all customers.

Other options retailers can leverage to reward VIP customers include offering high value, limited edition, or in-demand items for Click and Collect only. Or offering fast-track order fulfillment and preferential delivery options for customers designated as high value or long-standing and/or loyal. That includes providing optimised ‘white glove’ fulfillment services such as VIP pick and pack orders for fast pick-up or delivery; fulfillment from designated ‘VIP service’ stores; or fulfillment from locations where expedited shipping – such as a one hour delivery – is readily available.

As retailers prepare to reinvent their store networks for heightened agility and new omnichannel fulfillment models, they’ll need a highly adaptable order distribution system that makes it possible to establish unique parameters and rules so that inventory, fulfillment and pricing can all be synchronised to reduce costs – and maximise outcomes – without impacting on the customer experiences that drive value-added loyalty.

 

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