Taking steps to ensure timely retail deliveries is critical for suppliers—especially during the holiday season. We’ve written in the past about how noncompliance with retail requirements can be costly. In addition to maintaining standard compliance, suppliers are met with a new set of challenges in Q4. As retailers are working hard to attract customers and avoid stock-outs, manufacturers must be ready to meet their inventory needs in a way that supports today’s omni-channel shoppers.
High Stakes for Retailers
Because some retailers bank on the holiday shopping season for nearly 20% of their annual revenue, avoiding stock-outs during this time is critical (National Retail Federation). According to a recent survey, 75 percent of adult consumers in the United States experienced stock-outs when making purchases in stores last year, and 38 percent say it happened often. Online shoppers fared only slightly better, finding stock-outs 63 percent of the time. When these customers found products unavailable in brick-and-mortar stores, 58 percent became lost sales, taking their business elsewhere or skipping the purchase. Shoppers in the cyber world reacted even more harshly with 65 percent pressing the delete button and abandoning the sale altogether (GT Nexus).
Stock-outs are clearly bad for current sales, but the bigger problem is the impact on a retailer’s future. Inadequate supply harms their brand and diminishes customer loyalty. In fact, 38 percent of the customers surveyed blamed the retailer for the shortage, regardless of who actually caused it (National Retail Federation). Retailers don’t suffer those losses silently. Instead, they frequently sever relationships with the manufacturers completely—leaving them with heightened pressure to perform well.
The Omni-Channel Effect
Complicating the issue, millennials and consumers in general are becoming omni-channel shoppers, often buying online and returning in-store, which means products need to be in many places in the right amounts and at the right time at once (The Wall Street Journal).
Because of this, retailers are experimenting with new distribution strategies. They’re focusing less on improving forecasts within traditional channel siloes, and more on creative ways to re-direct inventory across channels, between e-commerce and brick-and-mortar outlets. For example, some are filling both e-commerce and in-store replenishment orders from a single DC, while others are filling online orders directly from their brick-and-mortar stores (DC Velocity). Proper inventory management leads to more sales and customer loyalty, so retailers will continue to tweak their operations until they get it right.
How to Become a Retailer’s Best Friend
As retailers attempt to better predict rapidly shifting consumer demand, suppliers must remain flexible and focus on helping them optimize their omni-channel customer experience. Below are some tips for becoming your retail customer’s hero this holiday season and beyond.
- Think “Just-in-Time.” While retailers are working out the kinks in their inventory management strategies, they may require last-minute, just-in-time deliveries directly to their stores to avoid stock-outs. Make sure you’ve developed a carrier network that allows for flexibility—one that can handle everything from regional and national capacity to last-mile rush orders.
- Be Prepared for Smaller, More Frequent Orders. This could mean rethinking your pick/pack/shipping operations to support smaller orders, as well as adding reliable parcel and LTL carriers to your transportation mix.
- Invest in Technology. Inventory visibility, specific customer preference data, and logistics optimization are vital to supporting an omni-channel strategy. Investing in software that can help you better manage data and workflow will benefit all parties in your supply chain.
- Communicate. With omni-channel retail, there are still a lot of gray areas when it comes to logistics. Set clear expectations up front regarding which party—supplier or retailer—will incur the transportation costs associated with a new fulfillment method.
We understand the pressure of shipping during the holiday season, and that Q4 can be challenging. We’ve created dedicated, time-sensitive, and reliable capacity solutions for Fortune 500 food manufacturers, retailers, and small food chain shippers alike. Let us do the same for you.
What we offer:
- Strong familiarity with complex pick-up and delivery requirements of big-box retailers, manufacturers, and food distributors
- Real 24/7/365 capabilities: after-hours, weekend, and holiday capacity
- Proven geo-tracking technology and a Tier-1 carrier network that yields 100% OTP
- Overflow, JIT, and team shipments