KEY POINTS

  • As Amazon continues to cement its reign, legacy retailers are increasingly struggling to survive, with many caught in a cycle of falling foot traffic, declining comparable-store sales, and increasing store closures. In fact, over 8,600 retail stores could close this year in the US — more than the previous two years combined.
  • Omnichannel — a cross-channel business model that connects a retailer’s in-store, online, and mobile presence at different stages of the customer purchase journey — is oft-discussed as an antidote to physical retailers’ woes. Omnichannel fulfillment methods like ship-from-store and click-and-collect can help retailers manage the transition to digital by increasing online sales, curbing shipping costs, and keeping their brick-and-mortar locations relevant. 
  • However, few retailers have mastered the omnichannel fulfillment model. That's because their logistics and fulfillment operations are not optimized to support multiple channels at once. As a result, many retailers report that their omnichannel services are not adding the value they promise — only 10% of global retail CEOs surveyed earlier this year by JDA Software and PwC said they are making a profit while executing omnichannel fulfillment strategies.
  • Successfully implementing omnichannel will require massive overhauls of retailers' systems and processes. This includes deploying new inventory and order management systems that can effectively track data across channels, as well as reformatting stores to better handle fulfillment. These undertakings can be painstaking and costly, but they are critical to fully reaping the benefits of cross-channel fulfillment.

Introduction

Brick-and-mortar retailers are caught on the wrong side of the digital shift in retail, with many stuck in a dangerous cycle of falling foot traffic, declining comparable-store sales, and increasing store closures. Over 8,600 retail stores could close this year in the US — more than the previous two years combined, brokerage firm Credit Suisse said in a recent report. Meanwhile, e-commerce pureplays are riding the rise of digital commerce to success — none more so than Amazon, which accounted for 53% of online sales growth in the US last year, according to Slice Intelligence.  

Omnichannel — a cross-channel business model that connects a retailer’s in-store, online, and mobile presence at different stages of the customer purchase journey — is oft-discussed as an antidote to physical retailers’ woes. Omnichannel fulfillment methods like ship-from-store and click-and-collect can help retailers manage the transition to digital by:

  • Increasing online sales by offering cheaper, more [...]