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Retailer Multi-Channel Operations Capabilities Get an Early Test in the 2011 Holiday Buying Season

Guest Post by

Bob Ferrari, Founder and Executive editor of the Supply Chain Matters blog

Today is Cyber Monday and we provide our first update to our previous commentary on how retailer multi-channel operations (MCO) capabilities will be challenged in the current 2011 holiday buying season. We noted previously that while overall holiday shopping sales will not increase significantly overall, the real story will be reflected on how both online and physical retailers capture the interests and buying motivations of far more tech-savvy and mobile empowered consumers.

According to a National Retail Federation survey conducted by BIGresearch over this weekend, traffic and spending were up both online and in stores, reaching historic highs.  The huge hype of advertising and holiday promotions has seemed to have drawn consumers to shopping a bit early. A record 226 million shoppers visited stores and websites over Black Friday weekend, up from 212 million last year. The average holiday shopper spent $398.62 this weekend, up from $365.34 last year, an increase of slightly over 9 percent.  Total spending reached an estimated $52.4 billion vs. $45 billion during last year's period, an increase of 16 percent. Additionally, shoppers also checked out retailers' deals online, spending an average of $150.53 on the web - 37.8 percent of their total weekend spending.

For the first time, NRF asked how shoppers would use their smartphones and tablets over the weekend. More than one-quarter (25.7%) of Americans with tablet devices said they did or will purchase items with their devices and 37.4 percent will or have researched products and compared prices with their tablets.  Overall, more than half (57.1%) said they have or will use their tablet devices to shop for gifts this weekend.

Shopping patterns were even more interesting.  More than half (51.4%) bought clothing and clothing accessories, and gift buyers were also drawn to promotions on electronics and computer-related accessories. Nearly four in 10 (39.4%) bought electronic items, up from 36.7 percent last year. Additionally, shoppers stocked up on home d├ęcor (21.3%), gift cards (23.1%), toys (32.6%), and jewelry (21.8%).

An article published in USA Today on Friday (paid subscription or metered view required) observes that retailers and shoppers are both experimenting this holiday season to figure out the most effective and useful ways to shop.  Some retailers have been adroit at equipping salespersons with mobile devices to assist shoppers and keep them in the store or on their web site.

Consumers shopping for the hottest toys can utilize to order their toys and pick-up from a neighborhood store.  Macy's executive vice president of marketing and advertising is quoted: "My challenge is to give shoppers that great experience from every channel." The retailer has equipped store personnel with special tablets to order special or non-stocked merchandise on Macy's web ordering site to assure a sale.  Retailers such as Macy's, Nordstrom and Sears are providing free in-store Wi-Fi access. Home Depot will be testing the deployment of 30,000 mobile devices among 2000 stores which feature bar-code scanners, cameras and video playing capabilities to assist home improvement shoppers with gift selections.

A spokesperson with the NRF notes that the holiday shopper who utilizes multiple channels, online, mobile and in-store, will spend 22 percent more than people who shop only in stores. Wal-Mart is also focusing on assuring a seamless experience by allowing consumers sneak peeks at upcoming in-store specials.

While much of the retail industry and business media is focusing on retailers attempts to integrate online and in-store retailing, the real test in our view, lies with smarter inventory management and supply chain fulfillment capabilities among retailers.  Brick and mortar retailers will have to balance total inventories among in-store and regional distribution center stocking plans, figuring out what channels are drawing the most consumer activity.  No doubt, sensing and response management capabilities will be put to the test.  Online retailers on the other hand, will lure customers with a more pleasing web experience, the convenience of free shipping, inventory availability and lowest price. As in the past, the biggest beneficiaries will likely be parcel and air freight carriers such as FedEx and UPS who will become the last mile fulfillment agents of the holiday sale.

We all get the opportunity to learn when this holiday season finally unfolds over the coming weeks.  For retailers however, the early indicators of this year's season bring forth the importance of viewing the integration of online and in-store not solely as a multi-channel commerce (MCC) and web capabilities investment initiative, but rather a balancing of web and supply chain inclusive multi-channel inventory and operations management (MCO) capabilities as well.  A sale is only consummated when the consumer is satisfied with both the buying experience and receives the physical goods on-time within price expectations.


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