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Retail ECommerce to Grow Significantly

Oct 1, 2012

 For retailers today, it is an exciting but challenging time. The ecommerce revolution has created a newly empowered consumer, the "always-on" consumer, who has higher expectations for the retail shopping experience than ever before. But how should retailers transform their business and their supply chains to support the omni channel delivery of products to these new consumers? Earlier this year, JDA Software Group Inc., the Supply Chain Company partnered with Kevin O'Marah, senior research fellow at the Stanford Global Supply Chain Forum to take a deeper look at this changing retail environment, surveying more than 100 retailers to examine the effects of ecommerce on the retail value chain. Following are some highlights of that survey:

 The ecommerce explosion.
 Whether you look at forecasts from JP Morgan, Gartner, Euromonitor or Forrester, the trend is clear: there is significant growth in ecommerce expected in the future. When examined alongside the most recent U.S. census data tracking ecommerce sales by different retailer types, an interesting trend emerges. Retailers not bound by brick and mortar real estate; for instance, those that sell through catalog, television or phone, are quickly taking advantage of this channel, with ecommerce accounting for a higher percentage of their sales.

 Shifting brand loyalties.
 When retailers were asked if they thought an ecommerce-enabled future favors brand loyalty for the manufacturers, retailers, or neither, the survey respondents were essentially split. It is possible that retailers see the emergence of ecommerce as an accelerator to brand building that favors manufacturers, who, like PepsiCo a few years ago, can sweep away huge amounts of retired imagery and messaging almost overnight, while stores need to physically remove signage, fixtures and labels across thousands of doors.

 Supporting new levels of complexity.
 When retailers start exploring how to accommodate this new level of complexity, they must consider the structures and functions that are involved. A critical element is better integration between the store and the supply chain. While it may be too much to expect supply chain and store integration to consolidate data like total cost for product, packaging, delivery, financing terms and service contracts, it is clear that is the direction things are headed.

 The new retail value chain.
 Clearly, there is an expectation that retailers are going to have to design a new value chain. Processes need to be integrated from source to sale. Retailers must have a more sophisticated understanding of their relationships with suppliers, all the way through to the shelf or point of sale, that moment where the shopper is there and thrilled because you have what they want.

Topic: Business Strategies

Related Articles: Retail Ecommerce  Ecommerce Revolution 

Article ID: 1656

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