by Jamie Kiser
While major industries from tech to the public sector felt COVID’s pain points, not many felt them as acutely as retail. Retailers must now contend with everything from unreliable supply chains to a limit on the number of customers in-store at any given time, as consumer behavior shifted with social distancing guidelines and new needs.
For example, e-commerce grew by 44% in 2020. As we begin recovering from the pandemic, retailers increasingly push to deliver their customers an in-store shopping experience as seamless as it is online. However, these new digital strategies rely on precise inventory management, which remains a pain point for many brick-and-mortar stores.
For retailers to ensure they’re not missing out on future opportunities, they need to leverage one thing: data. By utilizing customer intelligence and better data management, retailers can collect supply chain data in real-time, make better orders to suppliers based on customer intelligence. Data will help retailers fully integrate their supply chain, customer, and in-store data to ensure they’re creating an in-store experience that’s competitive to shopping online and other new shopping behaviors.
Eyes on the supply (chain)
The pandemic has revealed the fragility of the supply chain. With unprecedented unpredictability in what products stores will and will not have access to and when retailers need to integrate real-time data management into their online operations. Investing in supply chain data strategies enables retailers to adapt and adjust to sudden breakdowns from their suppliers.
Like Wayfair and Dick’s Sporting Goods, some companies leverage real-time inventory data to make their supply chain transparent to their customers, so they are always up to date on what is and isn’t on the shelves. Investing in data management tools to collect supply chain data in real-time empowers retailers to create better customer experiences and saves stores the estimated billions in lost sales to customers discovering their desired item is out of stock.
However, supply chain erosion is not the only supply problem retailers will have to overcome. Some issues facing supply and inventory come from consumers, like last March’s run-on toilet paper or the PS5 selling out before they even made it to shelves. Seemingly instantaneous changes in customer behavior can instantly impact what items retailers are prioritizing in orders from suppliers. But without understanding customer behavior, retailers can overcorrect and wind up with dead inventory on their hands.
Customer analytics influence orders.
To avoid collecting dead inventory and ensure orders to suppliers are accurate to their customers’ desires, retailers need to integrate customer intelligence with their supply chain information systems. Combining this information empowers retailers to place orders from suppliers based on precise predictive models of customer behavior. This way, retailers will keep up with rapid consumer behavior changes and keep supply chains up to speed with the latest trends in brick-and-mortar shopping.
For example, buy online, pick up in-store (BOPIS) shopping experiences have been a growing trend among retailers and consumers the past few years, and this trend shows no sign of slowing down. One survey found BOPIS sales grew by 208% in 2020. But BOPIS is not the only trend growing during the pandemic. It has also accelerated research online, purchase offline (ROPO). Finding success in both BOPIS and ROPO is entirely contingent on understanding what’s on the shelf, what suppliers bring in, and which items are unpopular and creating dead inventory. By collecting specific customer intelligence, such as the products customers are researching, retailers can build predictive models for when online research turns into an in-store sale.
Leveraging customer intelligence not only helps brick and mortar retailers keep shelves stocked with the products their customers wish to purchase but can also be integrated with supply chain data to optimize operations. Investment in data management and integration can positively impact retailers’ profits by allowing them to make purchasing decisions from suppliers based on supplier circumstances and customer demand. Pooling data from both suppliers and customers into a single source of truth gives retailers the ability to operate under intelligent predictive business models. It also will prevent direct profit loss to competitors. Research shows an estimated $36.3 billion is lost to brick-and-mortar competition annually to customers purchasing elsewhere upon discovering their desired item is out of stock.
An integrated approach to supply chain management
Integrating real-time supply chain data with customer intelligence can prevent customer walkouts and increase profits by mitigating the risks to the supply chain created by the pandemic. However, when this external data combines with internal data — like sales, restocking times, demand surges, and more – brick and mortar retailers can position their supply chain to be in sync with the real-time shopping occurring online and in-store. Better business intelligence and supply chain data management empower retailers to offer customers a competitive experience to find online. Doing this requires a robust data management system and a business-wide data strategy that integrates data across all verticals.
The brick-and-mortar way foward
A year into the pandemic and the retail industry remains in an ever-precarious state. However, consumer trends show there are still growth opportunities for the brick-and-mortar stores prepared to meet customer demand.
Making data management an integral part of retail operations will help companies meet the supply chain challenges presented by COVID-19 and empower them to keep their business growing.