Preparing your supply chain for
multi‐channel retailing
Stewart Samuel, Program Director, IGD
www.supplychainanalysis.igd.com
This afternoon’s presentation
The rise of multichannel retailing
Supply chain challenges
How suppliers have been responding
This afternoon’s presentation
The rise of multichannel retailing
Supply chain challenges
How suppliers have been responding
Retailing is seeing a generational shift
Hypermarkets will need to generate leisure appeal
Supermarkets will showcase ‘foodie’ credentials
Convenience will win in urban locations
Discount will appeal to a broader customer base
Online will be part of shoppers expectations
Digital to act as an enabler and bring more empowerment to the shopper
Core Formats
Source: IGD Research
Growth Formats
Source: thinkstockphotos
Source: curchew.com
Channels were linear
Drugstores
Source: IGD Research
Online
Discounters
Supermarkets
Hypermarkets
Dollar Stores
Convenience
Mass Merchants
Channels are blurring
Supermarkets
Hypermarkets
Discounters
Mass Merchants
Online
Convenience
Drugstores
Source: IGD Research
Dollar Stores
What can we learn from the UK market?
2014
Superstores
Hypermarkets
By 2019:
‐$5.3bn
Source: IGD Research
2019
Small supermarkets
Convenience
Discount
+$0.2bn
+$20.3bn
+$18.6bn
Online
+$16.1bn
Traditional retail
‐$0.2bn
Expecting to see progress with ecommerce this year
Hard discount continues to attract interest
Small formats rather than c‐stores
This afternoon’s presentation
The rise of multichannel retailing
Supply chain challenges
How suppliers have been responding
Supply chain priorities
1. Improving service level and availability
2. Reducing operating cost
Suppliers
3. Inventory and forecast accuracy
1. Increasing on shelf availability
2. Growing multi channel capability
3. Reducing inventory
Source: IGD Research
Retailers
The main driver of change in the supply chain
Source: IGD Research
Not looked at it
5%
Not looked at it
10%
Not really sure what we need to do
5%
Not completely clear, having a go
9%
On top of it and well prepared
23%
Manufacturers
Good idea of what needs to be done, getting started
41%
Source: IGD Research
On top of it and Not completely well prepared
clear, having a go 51%
21%
Not really sure what we need to do
4%
Retailers
Good idea of what needs to be done, getting started
31%
Title
1
Forecast accuracy
2
Order and pallet configuration
3
Range or SKU complexity
This afternoon’s presentation
The rise of multichannel retailing
Supply chain challenges
How suppliers have been responding
How ecommerce is impacting suppliers’ processes
We’ve got purpose built processes
7.9%
28.6%
We've had to adapt some of our processes to cope
,
25.4%
We use our standard processes
38.1%
It doesn't really affect us
0%
10%
20%
30%
40%
50%
60%
Online impacting planning and products
Specific SKUs
Dedicated on line managers
Specific online delivery points
Specific order to cash processes
Orders for singles, not cases
Reduced minimum order quantities
Shorter lead times for online orders
Separate forecast and demand planning activity Unique promotions for on line
Impact of c‐stores on suppliers’ processes
Purpose built processes
7.1%
We’ve had to adapt some of our processes to cope
28.6%
We use our standard processes
It doesn’t really affect us
0%
10%
53.6%
10.7%
20%
30%
40%
50%
60%
Convenience processes challenge suppliers
Separate orders and deliveries for convenience stores and other channels within the same retailer Separate promotions in the convenience channel
Forecasting for promos and products can be different
Different lead times for convenience Separate manual ordering processes ‐ EDI not being used Multichannel retailers have different demand patterns, but combined orders, making forecasting difficult
There’s also a lack of detailed EPOS data, which doesn’t help Discount affecting the most suppliers
We’ve got purpose built processes 9.0%
We've had to adapt some of our processes to cope 44.8%
We use our standard processes It doesn't affect us
0%
40.3%
6.0%
10%
20%
30%
40%
50%
60%
Discount supply chain impacts both product and process
Mixed cases
Different case sizes
Specific outer case colours and labels
Specific display pallets
Greater use of full pallets
Driver unloading of vehicles
Manual order placement, using fax or post
Promotional ordering
Forecasting with lower levels of collaboration
Lean structures mean there aren't the people to talk to
Processes are designed to be simple and low cost Supply chain is fully integrated with planning our approach to multichannel
21%
It’s supply chain’s role to work with the business to meet the needs of the planned strategy
The supply chain has to be able to respond to the changes the business implements
33%
46%
Increasing strategic role
Business takes the lead in retailers
Supply chain is fully integrated with planning our approach to multichannel
It’s supply chain’s role to work with the business to meet the needs of the planned strategy
The supply chain has to be able to respond to the changes the business implements
25%
44%
31%
Increasing strategic role
Supply chain leads the strategy within suppliers organisations
A successful multichannel business Shopper Understanding
Retailer/Supplier collaboration
Integrated Supply Chains
Digital technology and data capture
Source: IGD Research
Internal Capability
Key takeaways
•
Growth is coming from the ‘new’ channels. Supply chains need to be ready •
•
Retail supply chains are ahead of suppliers in being ready for the changes
Smaller suppliers are in most danger of being left behind, so need to start now
•
The discount channel is affecting suppliers the most ; over half said they have had to change or develop specific processes for the discounters
•
Retailers are taking a total business approach to multichannel, where as suppliers see it more of a supply chain issue.
Suppliers need a total business view or they may miss out on the growth
•
Next steps:
Conference delegates can receive a unique copy of our latest insight on the hot topics that matter:
•
•
•
•
Availability
Inventory
Cost and service
S&OP
E‐mail Stewart.Samuel@igd.com
Source: IGD Research
Access our supply chain insight online
www.supplychainanalysis.igd.com
Connect with us!