How supply chain and logistics are providing competitive differentiation points for retailers as they look for new ways to stand out in the marketplace.
The nation’s retailers are changing their business models to adapt to changing consumer preferences. As part of that mission, stores are using flexible logistics and transportation approaches that lead to more streamlined, efficient supply chains. Driven by the booming e-commerce market and an ever-shifting business environment, these moves are helping retailers react faster, increase customer touchpoints, and meet the needs of the on-demand buying evolution.
“Bolstered by a strong labor market, growth in disposable personal income, and elevated consumer confidence, 2018 experienced strong retail sales,” Deloitte reports. “But the economy may face some headwinds in 2019—making the year one of transition for retailers, who may need bold moves if they want to set themselves up for success in the future.”
Enhancing the Physical Shopping Experience
In Top trends and issues for retail in 2019, RSM’s John Nicolopoulos points to buying behaviors as a strong driver for retailers that want to grow their businesses this year. Buying behaviors will continue to evolve as Generation Z becomes a larger part of the consumer base. As the first truly digital generation, Gen Z will push retailers to new digital platforms to connect with them.
“That said, brick-and-mortar locations will continue to be an important channel for retail,” Nicolopoulos writes. “Despite the growth in online purchasing, recent studies suggest that millennials and Gen Z consumers also enjoy the physical shopping experience.”
“Enhancing that physical shopping experience will be critically important,” he continues. “Creative and interactive technologies will continue to play an important role in developing unique in-store experiences and knowledgeable staff who embrace and promote the brand, help build connectivity, and promote brand loyalty.”
Two Key Trends to Watch
As DB Schenker’s Director of Innovation and E-Commerce, John Stikes knows and understands the challenges that retailers are facing right now and the opportunities that lie in front of them in 2019. The retail market has been shifting on a global basis for some time now, he says, but two key trends are coming to the surface this year and impacting the way many of them do business: taking their brands out to their customers and delivering a highly-personalized shopping experience across all of their selling platforms.
“Many retailers are taking their brands out of their showrooms and bringing them to their client bases,” Stikes says. “They’re achieving this goal by establishing the same number of ‘touch points’ with their customers online that they have in the offline world.”
For example, retailers are using personal shoppers; deploying online platforms that allow customers to virtually “try on” clothing in their own homes; offering free delivery and setup in-home; and more highly-personalized options. “By making these moves,” says Stikes, “retailers are clearly working to mirror the approaches that they use in their brick-and-mortar businesses.”
Another way retailers are differentiating themselves in the market is through extremely high levels of personalization – providing customers with unique perspectives and offerings.
“Luxury fashion retailers are providing a high-touch customer experience through special packing and packaging processes,” says Stikes, who notes the DB Schenker works directly with a number of luxury retailers. “From a market perspective, we’ve seen such strategies really produce positive ROI for these companies.”
In HubSpot’s 5 Retail Trends That Will Transform the Industry in 2019, the publication predicts that even more brands will start driving deep personalization and customization into their online offerings. Using on-demand manufacturing based on customer specifications and highly-curated product offerings that vary by client, for example, these retailers are striving to reach their customers in unique and personal ways, HubSpot adds.
As a critical connection point between retailers and their customers, DB Schenker is developing innovative logistics models that help companies leverage these and other modern-day supply chain approaches. The two new retail approaches mentioned earlier are both yielding positive results, for instance, but they also require very different logistics models from one retailer to the next.
“It’s critical that logistics providers act as partners with the retailers,” says Stikes, “so that together they can best serve the customer.” DB Schenker works with retailers across numerous sectors, and as part of those engagements is often called upon to help crystallize successful go-to-market strategies that incorporate effective logistics and shipping strategies.
Mapping these strategies out in advance is especially critical online, where the retailer’s only customer touchpoint is the logistics provider. “It’s extremely important that everyone understands, has input on, and helps guide and direct the process,” says Stikes, “in a way that meets or exceed customer expectations.”
Supply Chain as a Retail Differentiator
As the retail environment continues to evolve, Deloitte says that many companies are funneling money into supply chain design, transformation, and improvements—all with the goal of making that supply chain a point of differentiation.
“As retailers buckle down and prepare for potentially challenging times ahead, supply chain improvements can be a significant growth driver,” Deloitte points out. “Rather than just investing in these trends in reaction to competitors, retailers also should think about accumulating long-term competitive advantages through wider supply chain strategies.”