One of Slimstock’s Retail experts, Stefan Kooijmans, acknowledges that retailers across Europe, North America and South America struggle with the same issues; fierce competition, increasing price sensitivity due to growing transparency and pressure to shift to an Omni-channel retailing model.
“Retailers need to make difficult decisions when it comes to Omni-channel retailing, but they often find themselves limited by the capabilities of their existing IT systems”.
You don’t have to be a retail specialist to notice that a lot is going on in retail right now. Even well known retail brands that have enjoyed success for many years are now having a hard time while web shops offering lower prices enjoy impressive year on year growth.
While many physical retail outlets remain profitable, the shift of demand to online channels is inevitable. Equally though, a growing number of e-commerce businesses are now starting to open offline shops as consumers still need to see and feel the product before they decide to buy.
LOOK FOR NEW WAYS
To cope with the changing consumer behaviour, retailers are increasingly looking for new ways to combine physical stores with online sales channels. Omni-channel is the buzzword: the orientation phase of the buyer journey takes place online, after which a physical store is visited to have a good look at the product. The consumer makes their choice right there but then goes back to the Internet to compare prices. The customer buys the product at the lowest price they can find and has it delivered at the location and moment of their choice. And this is just one of the many buyer journeys a consumer can take.
To be a successful Omni-channel retailer, you must be able to make decisions that are not only optimal for one channel but all of them. However, this is not an easy task! Supplier lead times are increasing, while product life cycles become shorter and shorter. Thus, to adapt quickly to changes in demand, and to be able to manage inventory proactively, retailers require advanced planning software.
Often IT systems hinder retailers instead of supporting them; especially for those who rely on old legacy systems that are of custom-made rules and Excel-lists. You cannot rely on these systems to make the optimal decision.
ROLE OF ERP HAS SHIFTED
The business technology analyst, Gartner, researched this topic and concluded that the role of company-wide ERP systems has shifted. Retailers not only require a sturdy backbone that encompasses master data, transactional data and processes, they also need dynamic. It has to be the best of breed solutions which have been specifically designed to help them overcome the supply chain challenges they face.
I think this is the main reason why relatively young retailers like Rituals, Udea and Pabo have gained a substantial competitive advantage against the ‘older’ retailers. They are not stuck with inflexible IT systems, and as a result, these businesses all utilize agile best of breed solutions.
TIME FOR A CHANGE
My advice to retailers is to evaluate their IT landscape very carefully. To change your IT landscape from obstruction to an enabler, you have to be brave enough to update your systems. Put simply, if you want to be a successful Omni-channel retailer, the time for a change is now.