Successful retail is all about managing the supply chain. In the past this meant getting items into a shop so that customers could see and buy them. For many that was the most efficient retail model for generations. Times have changed but retail is still fundamentally based around the idea of getting items that customers want to them quickly, efficiently, and economically.
At the time some of our best-known and longest-established retailers emerged there was another model that was equally successful – the mail order catalogue. Back in the Victorian era many businesses offered their wares through inches-thick catalogues listing everything from clothing to garden supplies. These items were offered at competitive prices and deliverable in the post or to the nearest railway station (of which there were many more than now) within a few days. There wasn’t much you could not buy this way back then.
The heyday for mail order was in the Victorian and Edwardian period but it had largely fallen out of favour by the 1950s. A few major mail order businesses continued but the concept was more often used for specialist items where conventional retail was not efficient. There are various social and economic reasons for this but one of them was almost certainly that “going shopping” became a leisure activity. That may well still be the case and it is a fair bet that in many shops and retail parks there are more people looking than buying. Another possibility is that people are looking but intend to complete their purchases elsewhere, typically online where the same item is likely to cost less. So perhaps the future of retail is some kind of hybrid where “shops” become a sort of showroom or leisure space where customers can purchase items for delivery at a time of their choice (even as soon as they get home) rather bought on the spot and taken away.
So, is there any current relevance? It is true that many successful ecommerce businesses are based on the same idea of specialising for niche markets. But the biggest operations offer a huge range of items and their success is based around their ability to operate highly efficient supply chains, based around a warehouse and utilising a functioning and reliable delivery system. In fact, no retail model works unless the business has good stock availability and can deliver on time (however long that might be) and keep its promise.
The expectation with the modern online retailer is that stock availability will be 100 per cent and delivery will be available very quickly. Meaning today or tomorrow. This explains why traditional retail is dying. It offers nothing that cannot be achieved by an efficient online-sales, home delivery (or perhaps click and collect) model.
In fact, it could be argued that traditional retail adds cost and complexity with little real benefit. Why go to the expense of transporting items to display them in buildings that cost money to run in the hope that someone will turn up to buy them? Plus, if you have multiple shops, you will need to send at least one example of every item to each in case a customer comes into that particular store. That can be wasteful and expensive, and it helps explain why online has been growing since the 1990s. It is efficient for retailers and convenient for customers. There are exceptions, particularly for “big ticket” or highly personal/emotional items where “we want to see it before buying”.
Customer behaviour during the Covid-19 pandemic has shown that many people are more than happy to buy more or less anything online. Many shops have been closed, travel has been restricted, and customers have been reluctant to visit town centres. Retailers with established ecommerce and home delivery operations have reported significant increases in sales – many well over 20% and some even higher. Businesses with no previous online presence – and startups – that have been able to get their operations up and running have been startled by their sales figures.
So, what is the relevance for the warehouse? Well, for most modern retailing the warehouse is the shop. It is central to stock availability and the smooth running of your supply chain. A well-run warehouse will help you get stock in, make it available for sale, and process and despatch orders on time to meet your customers’ requirements and expectations. If you only run an ecommerce business an efficient warehouse will help you align stock levels to predicted demand levels. That will free up storage space for additional different items and broaden the appeal of your business. Even if you still run a physical shop the warehouse can help in much the same way. Rather than store multiple items in-store for customers to take away, you can display a single item and customers who visit can order one for home delivery. White goods and furniture retails have operated like this for years so why not for everything else?
It sounds simple in principle, but the reality can be more complex. This is why having a WMS to support your operations can be critical. It will, of course, help with the day-to-day stock management tasks that are essential to any successful warehouse operation. But it will also provide interfaces with your ecommerce and sales systems to provide the stock availability information that makes it easier to sell items, links to delivery applications that ensure items arrive on time, and interfaces with back office applications that provide insights and efficiencies that help with business development and cost savings.
All of this places the warehouse and WMS at the heart of your business and supply chain. If they don’t work nor does your “shop” or “business.” Get it wrong and nothing else has a chance. But get them right and much of the rest will fall into place.
Alex Mills is marketing director for warehouse stock management solution ProSKU. With a logistics background and long career at WMS software vendors (and ProSKU parent company) Chess Logistics Technology, Alex has seen momentous changes and developments in both areas. He has worked extensively with companies in the retail, wholesale and logistics sectors, as well as more recently within ecommerce and fulfilment.
Alex is keen to help ecommerce sector companies benefit from some of the experience and practice of stock and warehouse management in other fields. Over the years he has contributed articles, views and opinions to industry trade journals and media on a variety of themes and topics.