BY NOELLE STAPINSKY
THE LAST MILE RACE
MICRO-FULFILLMENT HAS BECOME THE NEW FOCUS FOR RETAILERS Retailers knew they would have to embrace e-commerce eventually. But when the world stopped amid the COVID-19 pandemic that confined consumers to their homes, online shopping not only accelerated, it shifted consumer behaviour significantly. Despite the risks in supply chains, customers wanted goods delivered fast and for a reasonable price. While larger retailers could pivot quicker than others, most have shifted to using existing locations as micro-fulfillment centres (MFCs) to meet demand and decrease last-mile delivery costs. According to Jon Rosemberg, founder and CEO of Strongpoint Group Inc., the concept of MFCs was traditionally called ‘ship from store,’ a strategy that allowed retailers to get products to customers faster by shipping from a store in a closer geographical area. “It was more of a convenience play,” he says. “One of the things that the pandemic did – which was going to happen anyway – was it accelerated the behavioural change in consumers. If we wanted to buy something, we had to buy it online, as there was no other choice or alternative. This was especially hard for older generations. The pandemic forced everyone to get outside of their comfort zone and it really disrupted the traditional magnetism toward brick-and-mortar retail. We were already seeing a shift from brick and mortar to online and that was continuing to move, so 14 APRIL 2022
SP Apr 22.indd 14
retailers knew that at some point they were going to have to leverage their retail footprint in a way that made financial sense.” The case for brick-and-mortar will remain for those selling expensive products, like Apple, or retailers with tremendous traffic like Loblaws and Walmart, where consumers can purchase items that aren’t typically bought online. “There is also the financial advantage of buying in-store, and there’s even a quality advantage when it comes to things like perishables,” says Rosemberg. “But if you’re a retail store, one of the key metrics that you look at is productivity per square foot, or profitability and revenue per square foot. If your store is limited to servicing the customers that walk in, your revenue per square foot is limited to that.” Pandemic restrictions are easing, but online shopping will continue growing and changing the way retailers accommodate customers. “Prices, consumer choice, delivery, availability, location and convenience have become the new drivers of shopping behaviour,” says Shash Anand, vice-president of product strategy at SOTI, a business mobility solutions provider. “Retailers are now required to offer speed and flexibility, putting them at risk of losing customers if both shopping and delivery experiences aren’t seamless.” Retailers must remember that the era of mindless “add to cart” is over, Anand says. Shoppers are more mindful of the shopping journey – from
clicking to shipping. “Consumers now care about how the supply chain operates in the background due to its impact on the rising prices of their favourite products and overall satisfaction. They want to know if trucks are on the road, if there are stocked shelves in stores, and the exact wait times for orders and package deliveries to their doorsteps. Consumer expectations have not only changed, but if their preferred retailer is unable to provide any of those critical elements in their shopping experience, they will look for other retailers who can.” SOTI’s latest retail report: From Clicks to Ships: Navigating the Global Supply Chain Crisis 2022, revealed that 56 per cent of Canadian consumers are less likely to order an item that requires shipping from overseas than they were a year ago. And 33 per cent of Canadian consumers said that if delivery or pick-up takes longer than two days, they will look elsewhere. MORE MONEY, HAPPY CUSTOMERS Micro-fulfillment solutions can help companies improve the customer experience with faster delivery times and save money by carving out space in existing stores, rather than creating new warehousings. There are a few versions of how companies are implementing micro-fulfillment. “Some are picking singles manually in their warehouses, in stores or applying a hybrid setup SUPPLY PROFESSIONAL
2022-04-11 1:30 PM
