Retailers face big omni-channel challenges

More than 30 per cent of European retail logisticians believe they face big challenges in investing enough in IT, organise logistics, understanding consumer behaviour and making management responsive to omni-channel operations, according to UPS’s “Pulse of the Omni-channel Retailer” survey.

The survey, which covers logistics experts at more than 700 retail companies in Europe including 100 in the UK, found that retailers needed to focus on three areas: physical stores, out-of-stock situations and cross-border returns.

If UK-based retailers want to stay competitive, they should consider store footfalls are shrinking as online is growing, which means they have to go beyond the traditional purpose of a retail store, and use it as part of the inventory and distribution network, the survey found.

The UK leads on using stores for value added services (65 per cent of retailers use their store network to provide high value added services such as click & collect), but when it comes to using the store network to turn in-store out-of-stock situations into sales, they are somewhat behind their European counterparts. Only 19 per cent of UK retailers enable consumers to reserve the product either online or in the physical store in case of out-of-stock situations.

Almost one-third (27 per cent) of European retail companies already use stores as fulfilment centres for online orders.

The omni-channel survey research shows online businesses are quite responsive to out-of-stock challenges; 68 per cent of e-tailers offer tracking and delivery to a preferred address when the product becomes available and 59 per cent track orders and proactively notify the consumer on availability, while the physical stores lag behind. Almost half of brick and mortar retail stores (45 per cent) simply suggest customers wait, without providing an alternative.

On returns, the survey found that 61 per cent of UK retailers are charging for the return process if the items are not damaged or defective, well above the European average of 43 per cent. Retailers said their key challenges in this area are managing defective goods (65 per cent) and performing quality checks (61 per cent). The survey also suggests retailers need assistance from third-party logistics partners. Over 60 per cent of logistics leaders said they needed multiple third party logistics partners to manage returns.