Today’s customers are looking for a seamless purchasing experience, whether that’s in-store, online, or a combination of both. But the so-called “last mile” — the time it takes for a shipment to reach a customer —can be a thorn in the side of a retailer. Enter in-store fulfillment.
Benefits of in-store fulfillment
Mounting shipping costs are costly for retailers who are reluctant to pass them along to customers who are looking for the best price for every item, as well as free shipping.
By offering in-store fulfillment, the delivery process can be seamless as customers choose from curbside delivery, click and collect, and buy online/return in-store options.
Employees can address customer requests in real-time, monitor inventory, and deliver attentive service.
In-store fulfillment means retailers no longer have to route products exclusively to a warehouse.
Nordstrom and Kohl’s are excellent examples of putting the strategy into practice.
They can fulfill orders from the store closest to the customer’s location, leveraging their stores as fulfillment centers and shipping orders directly to customers, reducing costs and speeding up deliveries.
Ship-from-store, ship-to-store, and in-store pickup can then be handled with one solution that optimizes in-store inventory usage and reduces the time and cost for fulfilling online orders.
Perhaps the most daunting part of the process is getting a 360° view of inventory by connecting data from e-commerce sales with in-store transactions.
Determining the correct timing for syncing online data and orders with in-store POS is vital; solutions can be configured to sync data at any interval, including real-time, hourly, nightly, or at other intervals that make sense for a retailer’s operations and network capacity.
If syncing lags, inventory can fall behind, and there’s a risk of selling out of products that have already been committed to online orders.
With seamlessly connected channels, shoppers can buy products online and pick them up in the store that same day.
Store associates can receive pick lists to select and package the products ordered online.
Selecting off-the-shelf products increases inventory turn and decreases the duplication that comes with holding a separate online order inventory.
In-store fulfillment completes the frictionless purchasing experience.
Customers get quick, free delivery — often receiving their items even faster than ordering online.
Retailers, in turn, move inventory more rapidly, helping to maintain price stability.
Both shoppers and retailers benefit from a more efficient customer experience.
As a retailer in a competitive marketplace, a major focus should be monitoring the health of your business. For most retailers this means getting a handle on your Key Performance Indicators, or KPIs.
A KPI is a metric that is designed to give you a quick snapshot of some aspect of your business. A KPI might be a measure of sales, customer activity, or financial strength.
More than simply a bottom line number, a KPI is usually expressed as a comparison with some other factor. For example, looking at the average sale per customer gives you an understanding of the potential value of each customer.
Which KPIs should I track?
There are hundreds of KPIs that a retail business owner could be using at any one time. If an activity can be tracked and measured in your store, a KPI can be developed to provide you with business intelligence. One of the challenges is to decide on a handful of KPIs that provide you with the most valuable information based on the goals and objectives of your operation.
Every retailer will have a different set of KPIs. For example, a business that uses commissioned sales associates to sell to customers may place a heavy emphasis on KPIs that track the effectiveness of an individual sales associate while these KPIs may be irrelevant for another retail business.
You may want to track KPIs related to your customers. Simply knowing the number of customers who enter the store each day may not be enough for you. You may want to gain a deeper understanding about your customer’s shopping patterns and what converts them from a casual shopper into a dedicated, returning customer.
To do this, you need to carefully consider what data you should collect and analyze.
Choosing the right data
Data, by itself, is not a KPI until it’s arranged in a meaningful way. A list of sales transactions throughout the day is good data to have but it’s not the whole picture. The next step might be to calculate the total dollar amount of sales for the day. You can arrange the data in any number of ways: sales by department, sales by item, or sales by cashier. At this point, you still only have data to analyze.
The strength of KPIs is knowing how to use data to gain a competitive advantage. It all comes down to the goals and objectives you set for your business.
For each goal you establish, you must also create the metric that will determine if you are successful in reaching that goal. Your KPIs become the method by which you track your progress. If your key performance indicators do not reflect progress toward your goal, you must change the tactics you are using in your business.
Using raw data to optimize your retail operations
Let’s look at one simple example of how your goals and KPIs come together to give you a competitive advantage.
Marlene runs a small clothing store in a mid-size urban market. Lately things have been going good but the business has leveled off. She would like to increase her business over the next year. She creates a goal to increase her sales by 10%.
Marlene realizes that an obvious KPI is her total sales. She can also break down her sales on a daily, weekly, monthly, or quarterly basis to compare with the previous year. This gives her the maximum degree of flexibility especially since her sales tend to fluctuate according to well-defined fashion seasons.
Marlene decides that a good strategy would be to do more advertising on radio and television during the coming year. To find out if the advertising is bringing customers into the store, she decides to track footfall, the number of people coming into the store. Fortunately, she tracked her traffic last year but if she didn’t, she could use the new data by correlating store traffic with the dates and times that advertising is running to see if the ads have an immediate effect.
If she notices that store traffic increases for a few days after a television ad appears, she may make more strategic choices about when to run television ads. Or she may be sure to have a special sale during the weekend following a big flood of advertising.
By tracking average customer spend, Marlene can determine how much the average customer spends during each purchase transaction. In order to increase sales, she decides to place some displays with accessories, scarves, and jewelry close to the cash registers. The strategy works and she notices that her average customer spend amount increases due to impulse purchases while customers are waiting in line.
Although her total sales KPI indicates some overall growth, Marlene is not satisfied with the progress she is making. She begins to track her conversion rate, the number of transactions throughout the day divided by the number of people who enter the store. This seems to indicate that a lot of people are coming into the store but not many are making purchases.
To combat this, she could implement a number of new strategies. Perhaps she should take a look at rotating her inventory more frequently so the styles are kept fresh. She might decide that she needs to add new merchandise. Eventually, Marlene decides to hire additional staff to take more time with the customers and help them pick out merchandise.
To maximize the effectiveness of her new employees, she tracks shopper to staff ratio. This KPI lets Marlene determine if she has the appropriate number of employees on the sales floor to handle the volume of shoppers. Monitoring her wage costs, which is wages paid divided by the total sales, will also help her monitor her costs.
As her business grows, Marlene may decide to implement different strategies or develop completely new goals for her business. These goals and strategies may necessitate new KPIs to help her determine if they are effective. As her needs change, so will her data collection requirements and so will the way she analyses that data.
Tracking KPIs in your Retail Pro
Retailers using Retail Pro have several built-in tools to help them track important KPIs easily and automatically, including pre-designed reports that can be accessed in Retail Pro Reports.
Filters allow you to easily report on different aspects of your operation and break down your data into different segments to allow you to take a birds-eye view or get down into the weeds.
Retail Pro reports can also be completely customized. This allows you to save time and money by adapting an existing report to show exactly the information you need without a lot of work and effort.
From inside Retail Pro, you can use customer or inventory statistics to gain more perspective.
X-Out and graphical reports allows you to look at sales activity throughout the day and get instant analysis.
Have a different KPI that makes your retail life easier, or have questions about KPIs? Email us at email@example.com with your comments and questions.
One of the big reveals during the past 13 months is that people need (and want) to shop, and that e-commerce filled that desire both for necessities and luxuries.
Small, neighborhood businesses with no online presence had the toughest time surviving, while online stores with brand recognition — ironically, often due to a brick-and-mortar presence — fared the best.
Most strikingly, big, traditional shopping mall “anchor” stores felt the sting of greatly reduced foot traffic, while also enjoying a significant uptick in e-commerce revenue.
For example, Nordstrom forecasts sales to increase more than 25% this year, with digital accounting for roughly half of all revenue. Malls have been losing foot traffic for years. Moody’s industry research arm Real Estate Solutions (REIS) forecasts that malls vacancy rates will reach 14.6% by the end of the year as retailers regroup post-pandemic and reconsider their store locations.
Brick & mortar format shift
And yet, customers consistently report enjoying an in-person shopping experience. Nothing truly can replace an experience of being able to touch and feel merchandise.
A case in point is the venerable Macy’s department store, a 162-year-old retail institution, which announced a year ago it would be closing 125 stores in “lower-end” malls during the next three years.
Macy’s strategy was to focus on locations with stronger sales as well as online operations. Then came lockdown and the pandemic era, and as shoppers tried to avoid malls, stores found ways to adapt.
Macy’s mall exodus is not unique; Dillard’s, J.C.Penney, Kohl’s, and Belk are also reportedly looking at freestanding and strip center locations.
Nordstrom, too, has been successful with its small format stores and intends to continue expanding those outlets along with its digital presence as part of its “Closer to You” long-term growth strategy.
Small stores, customer-forward strategies
According to reports, the stores will have full-service and possibly self-checkouts as well as same-day deliveries.
In addition, they will offer “buy-on line, pick-up in store” or “click and collect” service, which often comes with curbside pickup.
Such smaller stores are embracing the concept of offering a curated product selection, a characteristic more often associated with luxury stores. It provides these large retailers an opportunity to be flexible, react more quickly to buying trends and become more relevant to today’s clientele.
By showing a willingness to experiment with innovative merchandising ideas, these prominent retailers may not only rediscover their place in the industry, but also once again become leaders.
Increasingly, retailers are learning that sustainability matters to their customers, and the COVID season did not stop sustainability efforts.
Recycling, energy conservation and reduction of waste are all everyday topics of conversation.
That desire to help conserve Earth’s resources has helped unite customers who may otherwise be very different from one another.
To meet the increasing requests from customers for carbon-neutral packaging and products, retailers are offering more environmentally friendly options. Gartner has recommended three ways retailers could improve sustainability within their supply chains: source responsibly; use recyclable or minimal packaging; incorporate “recycled goods” into product offerings.
Retailers can choose vendor and distribution partners who practice sustainability.
When reviewing vendors, retailers can weigh sustainability as quality.
Sustainability includes processes that mitigate the harmful impacts of pollution and waste on the ecosystem, including reducing freshwater contamination and greenhouse gases.
Retailers benefit too, because sustainable practices such as decreasing energy usage, cutting back on waste generated and eliminating equipment for pollution control lower operating costs.
Many suppliers are coming up with innovative packaging to reduce waste.
For example, dental floss can now be purchased in reusable glass vials, rather than hard plastic packages.
Not only has the product cut back dramatically on waste, but because of its very nature, it creates its own pool of customers who return to buy the floss replacement on a regular basis.
On the recycling side, L’Oreal cosmetics will market its first cosmetics in recyclable paper bottles to consumers this year.
Thrifting — or shopping secondhand—is in vogue, and not solely because items are bargains or bespoke.
Because these goods are living a second life, they aren’t taking up room at the local landfill.
In addition, significant amounts of resources are saved by not creating a new product. For example, making a pair of jeans uses approximately 1,800 gallons of water.
The production process also generated greenhouse gases equal to driving more than 80 miles.
Handling a supply chain is always part art, part skill — but during 2020, it sometimes seemed like it was also part magic act.
Getting products on shelves was a testament to the relationships retailers had built over the years with their suppliers, and only the strongest survived.
COVID inventory crisis
A little more than one year ago, COVID-19 lockdowns began — ushered in by a period of consumer buying never before experienced.
Within days, paper goods and disinfectants were out of stock, available only on the black market for outrageous prices.
A year later, quarantines are gradually being lifted, in some areas more quickly than in others, and most — if not all — of the items once in short supply are reliably back on retailers’ shelves.
A year ago, however, many retailers were forced to close very quickly, with little notice and stockrooms full of inventory.
Those retailers not considered “essential” were left with a surplus of stock that during the ensuing weeks and months became outdated and unwanted; many people weren’t leaving their homes, so foot traffic hit all-time lows.
Adapting stock strategies
Now that stores are open on a more regular schedule, their managers are recognizing that inventory strategies must change.
By offering a more curated selection than pre-COVID, retailers can more adeptly handle the ongoing uncertainty in customer traffic and buying behavior.
A number of retailers, including Gap and Nordstrom’s, reportedly reopened with a limited stock strategy, to hedge against a less-than-robust shopping season.
In some respects, offering customers the option of buying online, picking up in-store (BOPIS) saved the day.
Many retailers further simplified the process for customers by offering curbside pickup; customers never had to leave their cars to retrieve their purchases.
By allowing customers the flexibility of purchasing online and retrieving products safely without leaving their cars, retailers eliminated a point of customer friction: Customers had the convenience of ordering online plus, in many cases, same-day pickup.
However, retailers faced the challenge of maintaining the right amount of inventory in stores to keep brick-and-mortar shoppers happy while still profiting from opportunities to move inventory through digital channels.
Stores that came up with the perfect balance will likely continue to offer the service post-COVID because of its popularity with customers.
Visibility into inventory movement
Retailers can only be successful at both in-store selling and e-commerce with accurate insight from trading partners into what is coming in and when.
For example, sending shipment information within two hours of shipment departure, and including scannable barcode labels on all packages can help retailers manage appropriate safety stock thresholds for in-store and BOPIS experiences.
Inventory management tools like Retail Pro also make the process more efficient for retailers.
When ordering merchandise on a multi-store Purchase Order in Retail Pro, a retailer can generate an advance ship notice for each store so each store knows what merchandise to expect.
When the merchandise arrives at the store, managers can generate a voucher from the advance ship notice to receive the items ordered on the PO into inventory.
Inventory management pre-COVID required effort and attention to detail.
During COVID, the supply chain was thrust into chaos, as manufacturers slowed production due to workers’ illness at their facilities, and orders fluctuated from exceeding capacity to trickling in.
Post-COVID, in the weeks and months ahead, the economy will begin to recover, and inventory management will face challenges as demand increases and stock levels race to meet it. When vendors are transparent and help retailers plan based on accurate delivery forecasts, retailers will be able to pursue sales opportunities in digital channels, resulting in improved top-line revenue and contributing to a global economic recovery.
For retailers, a unified commerce strategy is built on the foundation of integrated retail technology for an efficient, frictionless customer experience across channels.
Unified commerce gives retailers a smooth, efficient means of transacting business, because inventory, sales, e-commerce, and fulfillment system data is integrated to regularly and automatically keep inventory availability and customer details synced and up to date.
From Point of Sale to e-commerce, from CRM to inventory management, all these technologies need to be connected so retailers have a clear picture of who their customers are and how to provide what they want.
Interaction with customers
Each time a customer enters the retail store, they leave behind a wealth of data for any retailer who can measure their interactions within the store:
What was bought?
What was picked up but not purchased in the end?
What was the dwell time near products that were not purchased?
How long was the customer in-store?
Was this an online pickup?
Did they purchase other items along with their online pickup?
Those answers, when documented with technology, inform a retailer’s back-end systems, so inventory can keep pace with demand, and so marketing teams can keep pace with customer needs.
To collate and analyze that information, retail processes and tools must be intelligently integrated in a retail management platform like Retail Pro to enable sharing of relevant data across both customer-facing systems and those that integrate with backend vendor systems.
Applications from the point-of-sale report on purchases, inventory, and customer data. Sharing this data with an integrated warehouse management system allows warehouse staff to have insight into stock levels currently on the shelves, and to place orders with suppliers as supplies diminish.
Sharing the data with a loyalty and personalized marketing platform like AppCard for Retail Pro allows marketing teams to create targeted campaigns around a customer’s purchase history.
Consistent data across channels
That principle also applies to in-store sales staff—they should have the same product information available as retailers’ online channels.
Integrating your ecommerce software with your POS can give store staff the visibility they need to serve customers who call in to verify stock availability before coming in.
Customers who started their retail journey at home but then switch “channels” to come into the brick-and-mortar store must be certain that inventory is in sync: Surprises such as realizing that products aren’t in stock when the web site said they were there are unacceptable.
There are a number of technologies that retailers can put in place to provide a seamless customer-facing experience.
Shelf labels and cameras can map consumers’ movements within the store. That helps in product layout for future products, and in product forecasting. They can also indicate where is the heaviest foot traffic within the store.
Beacons can communicate with an app on the customer’s phone to notify them of product sales when customers are in the store’s vicinity, enticing them to stop in.
When integrated with the POS as well, interactions in the app which originated from a beacon trigger and resulted in the ultimate purchase can be properly attributed to track the efficacy of the tools and campaigns put in place.
The connected data then provides insight also on unvoiced customer needs which are nevertheless discernable through their interactions with a retailer’s various channels.
Integrating data in retail technologies provides the foundation for retailers to more effectively determine and act on customer needs for a better customer experience.
The COVID-19 pandemic has motivated retailers to turn to technology to help their businesses plan better, increase productivity, and service their customers.
Contactless payments are one of the areas that, because of COVID-19, will change forever the way retailers do business.
Safer and faster checkout
These RFID-enabled payments have been available for years but have surged in popularity during the pandemic.
Not only is contactless more hygienic – in the time of COVID-19, no one wants to touch cash that’s been touched by hundreds of strangers – but it also streamlines the entire checkout process.
While the pandemic may have provided a strong push toward a cashless society, customers could still choose to use a traditional payment card, rather than NFC technology, and be safer from virus exposure during the transaction because they are operating the card reader rather than handling cash.
However, because they use radio-frequency identification, contactless payments reduce time waiting in lines.
The “tap-and-go” process generally results in speedier transactions. While the transaction time for a chip-enabled card can take as long as 30 to 45 seconds, a contactless transaction can be as short as 10 to 15 seconds.
Global adoption of contactless payments
Contactless transactions build upon RFID and typically use NFC technology, the foundation for services such as Apple Pay and Google Pay.
Globally, this method of payment is very popular.
The United States, however, has been slow to adopt contactless payments.
OEM mobile wallet transactions were predicted to increase as banks expanded the use of contactless cards.
In the U.S. market, contactless transaction values were expected to rise at an even higher rate than the global market, reaching $1.5 trillion by 2024, compared with the approximated $178 billion in 2020.
Once COVID-19 hit, contactless payments began to surge.
By August 2020, the global contactless payment market was valued at $ 1.05 trillion by 2019 transaction value, and is now predicted to register a compound annual growth rate (CAGR) of roughly 20.01% between 2020 and 2027.
Today, the global contactless payment market value is expected to surpass $ 4.60 trillion by 2027.
Customers have enough friction getting out to the store today. By offering contactless payments, retailers can provide an efficient, safe method for purchasing goods and services while enhancing the customer’s overall experience.
Understanding customer behavior and shopping patterns is difficult enough during “normal times.”
So, when a shockwave hits the system – like a global pandemic or natural disaster – it stresses the supply chain and puts planning on its ear.
Accounting for seasonality in demand
Predictive analytics can help retailers prepare for all types of seasonal happenings, including not only holidays, but also hurricanes and wildfires.
Natural disasters are often seasonal: For example, wildfire season is August-November and hurricane season is slightly longer, starting in June.
While it is impossible to predict the final landfall point of a hurricane or the path of a wildfire, goods can be procured in a way that optimizes costs while considering all path probabilities.
Making accurate predictions regarding the types and amounts of products demanded by consumers is not trivial: Ineffective forecasting efforts result in shortages of in-demand products as well as overages of unwanted products that ultimately must be salvaged.
Focusing predictive analytics on concrete business objectives
It seems paradoxical that predictive analytics uses historical information to determine future shopper actions.
Such retail data might include transactions, sales results, customer complaints, and marketing information.
Retailers use predictive analytics with a business goal in mind.
By harnessing large, heterogeneous data sets into models, they can glean clear, actionable intelligence that helps them achieve their goals, such as more sales, less inventory, and faster deliveries.
Having the right data is key to predictive analytics success. That information may include:
Consumer-related information (e.g., loyalty programs)
Online navigation traffic flow
External factors, such as weather
Retailers can prepare for seasonal shopping by crunching last year’s sales data, combining it with those other pieces of information, and creating a game plan that can meet any storm – or holiday – head on.
The key to retail growth in today’s marketplace is unlocking the benefits of predictive analytics to gain a deep understanding of the customer base to maximize sales, improve inventory churn and increase customer satisfaction.
The larger a retailer becomes, the longer it takes to get simple tasks accomplished.
Whether it is an associate’s inability to quickly respond to a customer’s product feature query, or the HR department’s delay in answering an employee’s benefits question, such examples are indicative of a systemic problem in providing relevant information when needed.
Then, when a global pandemic strikes, the inefficiencies resulting from operational growing pains are made all the more evident.
A systemic information problem
Inefficiencies tend to be rooted around lack of information.
A customer service agent doesn’t have visibility into the supply chain, for example, and can’t answer a customer’s question about order status.
In addition, the consequences of those inefficiencies are generally not confined to the backroom – one inventory problem can very quickly escalate to a customer service issue when a product shows up on the computer as in-stock, yet isn’t available on the sales floor.
Attempting to solve customer problems can be a frustrating process for both the employee and the customer, which may eventually lead to loss of trust and decreased retention for the business.
That threat can’t be taken lightly; according to Salesforce, 76% of customers report that it’s easier than ever to take their business elsewhere.
Gaining comprehensive visibility
A comprehensive suite of reporting and analysis capabilities is necessary to make sense of all the data a retail business collects through its various sales channels, including in-store as well as online and social media.
They are available on a wide range of desktop and mobile devices and provide not only decision-making data daily, but also a historical and trend view that offers strategic insights.
Selective archive search
Slow, inefficient archive operations force employees to struggle with storage and retrieval of in-formation that business analytics provides, stealing time from performing their core responsibilities.
Gathering too much information can be a major barrier to accessing the right information.
Some inefficiencies can be solved with archival systems that enable the easy application of multiple retention rules according to the document category.
For example, those HR records that require longer archiving periods than others would automatically be filed appropriately.
In addition, permissions are automatically allocated to those who require them according to skillset and authority.
All archived materials should be easy to access as needed.
Visibility into what?
Retailers are faced with gathering the answers to inventory questions, beyond what products are best-sellers and who is the target customer.
Such analytical questions include:
What products should be sold together?
What is the optimal shelf life is for certain products?
Is the pricing strategy impacting sales volumes?
What should the sell-through percentage be?
What is the stock-to-sales ratio?
What is the stock turn, and how many days of supply are there?
Best-in-class retailers head off problems from the start.
They understand the need for great reporting tools and the need to analyze the data, not just collect it.
They are proactive and require tools that alert them to potential problems, help them figure out root causes of successes as well as failures, and enable their businesses to be more agile so they can adapt when needed and profit from future trends.
Get answers from your data with custom Retail Pro reports >
Retailers are under scrutiny today more than ever, as customers are increasingly interested in how companies demonstrate their ethical practices in the ways they conduct business.
Customers are attuned to local, national and global issues, and their buying decisions are increasingly influenced by how retailers are responding to the world.
Indeed, customers who once wondered, “Does this company have questionable labor practices?” now also ask, “How did this company treat its employees during COVID-19?”
News reports suggest that the businesses that show concern and empathy for their employees are winning with customers.
COVID-19’s shift in retail plans and consumer behavior
The COVID-19 pandemic and periods of economic shutdown have thrust retailers into crisis mode, and into providing services that were not on the roadmap for this year — if ever.
Curbside pickup of items from bath towels to ground beef has become commonplace; even this past January curbside was something only a handful of pharmacies and chain restaurants offered.
Customers too had to change buying habits and embrace e-commerce.
The proof is in the numbers: It was, quite literally, Christmas in May as digital sales were up 77.8% year over year to $82.5 billion, tracking higher than holiday shopping levels on Black Friday and Cyber Monday, according to Barron’s.
Analysts are still watching to see whether these shifts will remain or recoil.
But during times of crisis, the way a business treats its customers can make a lasting impact.
Loyalty is reinforced with brands who show care in crisis
Consumers remember which companies contributed to their communities’ well-being.
Those that were supportive earn loyalty — and the ones that were perceived to be unsympathetic lost customers.
Customer experience leaders must not only position their companies as being socially responsive in order to attract and retain shoppers, but actually strive to embody those values.
Empathy, care and concern are part of a new currency.
Of course, delivering high-quality products and services at a good value along with providing excellent customer service will never go out of style.
But involvement in civic causes demonstrates how — and whether — the company cares about their customers.
In times of hardship, customers want to know their favorite stores are there for them and will reward those retailers with their loyalty even after the crisis has passed.
Retail Pro International (RPI) is a global leader in retail management software that is recognized world-wide for rich functionality, multi-national capabilities, and unparalleled flexibility. For over 25 years, RPI has innovated retail software solutions to help retailers optimize business operations and have more time to focus on what really matters - cultivating customer engagement and capitalizing on retail's trends. Retail Pro is the chosen software platform for omni-channel strategy by retailers in 130+ countries.