Following one of the toughest years on record for retail, investment in omni-channel and operational infrastructure is proving key to weathering the pandemic storm, a new survey of 400 US and UK international retailers, commissioned by PFS, has revealed.
The report, titled ‘Digital takeover: What retailers can learn from peak season 2020 about a digital-first future’, found brands that invested in operational infrastructure ahead of the 2020 peak trading season were able to capitalise on a surge in online sales, whilst those who didn’t struggled to keep up. During this stressful and unpredictable period, overall investments in fulfilment proved the most fruitful – with two thirds (67%) of retailers that invested in Buy Online Pick-up In-Store (BOPIS) services reporting increased sales volume. Curbside pick-up led to the next strongest performance with 55% of retailer reporting increased sales.
Navigating the peak of peaks
For those that were unable to make these preparations, however, the recent peak season proved one of the most challenging yet. As consumers moved online in unprecedented numbers, following the closure of many non-essential stores, 48% of retailers felt that they did not have enough time to make the operational changes needed ahead of peak season. In fact, half (50%) of retail businesses felt they were adequately prepared. This resulted in over one-in-six (17%) believing they had missed out on critical sales.
Lack of visibility and supply issues meant 53% of retailers felt they had difficulty locating available inventory. This would have put many brands at risk of delivery delays, or worse, running out of stock of items altogether. A further 52.6% said that they did not have enough internal resources to make the operational changes needed to be optimally prepared. Similarly, 45% felt their technology stack was unprepared for the increase in peak 2020’s online transactions. After such a turbulent year, a lack of preparedness in these areas had the potential to prove costly for retailers, many of whom would have relied on the festive season after an extended period of reduced high street footfall.
A digital-first era
These results highlighted an urgent need for brands to act, and act fast in order to survive and thrive in the year ahead. As a result of changing consumer behaviours seen during the peak season, over a third (36%) of retailers are planning to increase their investment in fulfilment capabilities; almost a third (33%) are planning to invest in additional online customer service; three-in-ten (30%) in curbside pick-up competences; 28% in their ship from store capabilities; and almost a quarter (24%) in BOPIS.
However, in order to provide the digital-first experience demanded by the modern consumer, more than half (52%) of retailers are planning to outsource all or portions of their e-commerce operations in 2021.
Investing in a hybrid future
With investment in BOPIS and ship from store capabilities a key initiative for many of these retailers in 2021, this provides a much-needed glimmer of hope for the struggling high street. However, to support this vision, inventory management and distributed order management capability will be pivotal. Despite issues faced regarding these capabilities during the recent peak season, just 17% of responding retailers are planning to increase investment in this area for 2021. Whilst brands are recognising the need for a hybrid future, these findings highlight there is still some disparity between what retailers think they need and what they actually need to make an omnichannel future a reality.
Christophe Pecoraro, managing director of PFS Europe, comments: “In a rapidly shifting climate, accelerated by the pandemic, retailers simply cannot afford to ignore the need to adapt and upgrade their current fulfilment offerings. The results to our research clearly show that those retailers who invested in omni-channel last year had a successful peak season – whilst those that didn’t struggled. Now is the time for brands to reflect on these learnings and invest in an omni-channel approach. That means more than just BOPIS and curbside pick-up, but the inventory and operational infrastructure that underpins it.”
“Omni-channel investment and operational infrastructure will prove make or break for retailers in 2021. And it is becoming increasingly clear that a hybrid approach to retailing is needed to survive. To not only inject value back into brick-and-mortar retail but also keep up in a digital-first era,” Pecoraro concluded.