In a Global Economy, the Future of Retail is Local
The global retail race has reached a tipping point. Automated supply chains and free-flowing commerce lanes have shrunk distances once thought impassable, and yet retailers still struggle to meet demand for next- and same-day delivery.
For customers, the thought is simple: We’ve always been able to get instant delivery for pizza and chinese food, so why not porch swings and power tools?
Though it wasn’t long ago that we accepted a fragmented shopping experience, we’ve come to expect a fully integrated experience that combines one-click buying, free two-day delivery and easy returns at our local corner store. And we now know that if our favorite retailer can’t deliver it when we want it, our favorite online juggernaut certainly will.
It’s not enough to deliver a great online shopping experience. The new retail imperative relies on how well the e-commerce strategy integrates with the retail ground game. The e-commerce boom, coupled with record-setting demand for express delivery, together have forced retailers to meet the unprecedented challenge of extending their supply chains locally — into the towns and communities where customers live.
What’s Old is New Again
The concept of “utilization” has been defined as maximizing the available capacity within a traditional hub-and-spoke system. But just as television evolved from cords to streaming, the shipping industry is evolving its concept of utilization to include maximizing all of its available resources — from brick-and-mortar assets to human capital.
To meet growing parcel delivery demand, driven largely by the $12 trillion in online retail spending expected over the next few years, retailers are taking critical steps to transform their supply chains into hyper-localized distribution networks. For many, the first step is putting their legacy assets and infrastructure to better use.
Transform physical assets
Major U.S. retailers, from Walmart and Macy’s to The Home Depot, are now leveraging existing assets like brick-and-mortar stores and warehouses to extend the reach and efficiency of their supply chain.
Neighborhood storefronts are no longer only showrooms and aisles, but also serve as hyper-local fulfillment centers designed to shorten deliver-from-store windows, reposition inventory same day, and activate direct-to-consumer warehouse delivery. Given that logistics always evolves towards maximum efficiency, moving products and consumer goods — especially high replenishment items — closer to customers just makes good economic sense.
Creative partnerships to expand footprint
There’s no doubt that creating a more localized footprint takes a tremendous effort across the supply chain. No one can do it alone, not even Amazon. In fact, the the online giant has partnered with Kohl’s department stores to create an in-store footprint. The partnership handles Amazon online returns, while doing double-duty as a hyper-local fulfillment center –not just in urban markets but in smaller cities and towns.
The complexities of omnichannel retail have led to unusual partnerships across industries. What were once only direct-to-consumer e-commerce companies, like Casper, Barkbox, and Harry’s, have found a brick-and-mortar home in Target — a tactic used to bring more in-store foot traffic and deploy product to customer homes even more quickly.
Brands don’t have the resources to build distribution centers in every city and town they serve. Partnering with complimentary retailers and distributors allows them to reach consumers across any zip code, while elevating their brand.
Re-deploy human capital where it matters most
Harnessing existing assets goes beyond real estate. Legacy retailers are finding smarter and more efficient ways to leverage human resources already within their local communities. In this emerging model, everyone from cashiers and co-workers to even customers can help create a better, faster, and cheaper omnichannel supply chain.
Walmart leads traditional retailers when it comes to innovating its supply chain for today’s customer. The big-box retailer has tested automated cashierless checkout, redistributed employees as personal shoppers and associate delivery to improve the shopping experience and speed up last-mile logistics.
However, Walmart isn’t the only one looking to its employees and local communities to power same-day delivery. The Home Depot and Tractor Supply are tapping into existing fleet of local drivers, employees and even customers to power express, last-mile deliveries. As major retailers continue investing in alternative delivery solutions, the move toward crowdsourcing will only grow within the retail industry.
To overcome rapidly growing competition, the most successful retailers will focus on optimizing and re-imagining supply chains at the local level. By leveraging underutilized assets in and around the communities where customers live, these retailers hold the power to usher in a completely new era of shopping.
Marc Gorlin is the CEO and founder of Roadie, the first on-the-way delivery service that puts unused capacity in passenger vehicles to work by connecting senders with drivers already going that way. Marc has been a successful serial entrepreneur for more than 20 years and has co-founded multiple companies, including Kabbage, PGP, and VerticalOne.