Retailers will have a better 2021 with more flexible fulfilment options
- Retail customers will expect a mix of fulfilment options this year - Andreas Grydeland Sulejewski of Neptune Software explores how retailers can adapt
As retailers move into 2021, they're reflecting on the lessons learned from the past year, when those who could adapt fastest to serve customers in new ways found themselves best placed to survive - and even thrive in some cases. The trend towards ordering online gained a sudden boost as outlets were forced to close their doors, while stores took on a new role as e-commerce distribution centers - offering options such as click-and-collect via curbside pickup, BOPIS (buy online pickup in store), and same-day delivery using local couriers or even their own staff.
Those retailers that had already forged digital connections between their e-commerce sites, inventory and POS (point of sale) systems were able to respond quickly to their new circumstances. Others began to accelerate digital transformation plans in order to catch up to the new reality.
Fulfiling digital sales from stores
We've read some of the successes in diginomica's coverage of the retail sector throughout 2020. US retailer Target is one example, where significant investment in various digitally enabled fulfilment options have meant its 1,900 physical stores have remained valuable assets, even during lockdown. Through the summer, around 75% of digital sales were fulfilled by stores, according to the Q3 earnings statement issued by CEO Brian Cornell:
Within digital, we continue to see the strongest growth in our same-day services, Pick-Up, Drive-Up and Shipt, which together grew more than 200% in the quarter. These services are fast, convenient, reliable and contactless, which explains why they continue to generate very high levels of guest satisfaction.
Another example is household goods chain Bed Bath and Beyond, which has seen 77% year-on-year growth in its digital sales, with 16% of those sales now being fulfilled via BOPIS. The chain's processes are so well connected that it guarantees to have BOPIS orders ready within two hours, and almost two thirds (60%) are ready within 30 minutes.
Connect stores to back-end systems
For all retailers, it's become a priority to connect online stores with back-end systems and deliver fulfilment at store locations via mobile apps connected into point-of-sale systems. To quickly roll out these capabilities, IT teams have adopted rapid development platforms and API-based integration strategies to gain the flexibility to deliver what's needed. As Neptune Software's Natalie Kouzeleas wrote last year, the customer experience depends on access to real-time data:
You just need a POS that's fast and effective at processing customer orders, whilst connecting in real-time to a master data view of that transactional data in your back-end systems …
Creating data tunnels with APIs is the only feasible way to ensure the master data is continually updated and made available when and where it is needed in real-time to secure business agility.
For example, Nordic retail electronics chain Elkjøp began rolling out a new microservices based solution in May 2020 that will ultimately serve 10,000 users across stores throughout the Nordic region. It has found that only 15% of customers buy online but many more make their selections online before visiting the physical store to purchase. Store assistants can now view the customer's online history and help them refine their selection, and the sale can be completed curbside. 2020 turned out to be a year of remarkably strong growth for Elkjøp.
Retailers need to stay agile
With customer needs and expectations changing rapidly, retailers need to be able to quickly deploy new solutions and fine-tune functionality on the go. as Aravinda Boyapati, Senior Manager and UX and Advanced Tech Incubation Leader at Johnson & Johnson, explains, a rapid application development platform is a crucial part of the toolkit in today's retail environment:
You don't have a year-long time to deploy a project. Our approach is to do it in an agile way. You come up with those minimum viable products which you can put into production in less than ten weeks ... You can actually improve it on top, building more capabilities and then help your business to evolve them in a faster pace.
Whatever surprises lie ahead in 2021, there's no question that retail customers will expect a mix of fulfilment options that respect social distancing while continuing to offer choice and convenience. It's up to retailers to ensure they have the connected systems and mobile solutions that will allow them to deliver that customer experience.