UPS Saturday delivery program.

In a survey of top retail executives by HRC Retail Advisory, the “rush to deliver omnichannel offerings” has created “operational challenges” that are souring the shopping experience for consumers.

All of the respondents in the survey, which polled 30 C-level executives of leading North American retailers with a median sales volume of $2.6 billion, noted that they are having operational challenges as a result of implementing and delivering an omnichannel approach.

Antony Karabus, chief executive officer of HRC Retail Advisory, said brick-and-mortar retailers “have overextended themselves as they’ve tried to leverage their physical store fleets.”

“E-commerce and omnichannel fulfillment and related returns have led to sharply rising freight costs and product margin challenges,” Karabus explained. “Meanwhile, consumers expect ever-faster delivery, pressuring retailers to meet those expectations in order to remain competitive. Very few retailers have formal scorecards to measure the performance and profitability of their omnichannel efforts, which often means they can’t effectively and efficiently take the corrective action needed to improve customer service and profitability.”

HRC retail advisory

Antony Karabus  Courtesy image

Researchers at the firm found that BOPIS (buy online, pick up in-store) “is not consistently reliable, as systems often tell shoppers that an item is available in a specific store when the store does not actually have it in stock.” The poll found that 66 percent of retailers surveyed said BOPIS execution is “inconsistent due to retailer inventory inaccuracies.”

The survey also found that just 14 percent of respondents “are using predictive analytics, and most of these retailers are struggling to figure out how to integrate such analytics into operational processes.”

Karabus noted in the report that as the industry navigates the convergence of online and physical stores, “as well as customers’ increasing demand for ordering, picking up and returning their products whenever and wherever they desire, retailers must now offer omnichannel services as a standard in order to compete effectively and leverage the advantages their physical stores give them over e-commerce-only retailers.”

Other notable findings of the report include the revelation that inefficiencies in fulfilling online orders are causing delays, “as 77 percent of retailers ship primarily from e-commerce fulfillment centers instead of from local stores that may be closer to customers’ homes or offices and thus allow customers to receive their orders quicker,” authors of the report said.

Additionally, nearly 70 percent of the retail executives polled are “not optimizing their customer order systems to prioritize filling the entire order from one location, causing split shipments and increasing freight costs.”

Karabus said that the biggest challenge overall facing today’s retail leaders “is identifying which is the most cost-effective location to ship e-commerce orders from and how to allocate merchandise to stores based on consumer demand, one has yet to be figured out.”



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