Eye on eCommerce: Lucy Larkin, MD retail, Accenture

Retailers are constantly battling against the clock to satisfy their customers. As eCommerce has made consumers more demanding, retailers are finding it difficult to keep up with fulfilment as shoppers expect their goods to be delivered in the shortest timeframe possible for very little money – or even for free.

As digital channels have matured, Lucy Larkin, managing director of Accenture's retail practice, says it is the retailer's supply chain and logistics which are being squeezed the hardest.

She explains that supply chains were built to move large numbers of products to replenish the sales floors and offer a very different customer experience to that expected today.

"Now they have to get a single parcel into a customer's hands – who might be at home, work, having lunch at a restaurant, picking it up from a locker or using click & collect from store," she says. "There's now a race to satisfy the customer."

Larkin explains retailers firstly responded quickly to new digital customer demands by putting tactical solutions in place, such as couriering parcels where they needed to be, which provided a more compelling customer offer and kept them ahead of their competition.

"But we're now at a tipping point," she points out. "Historically, a small number of customers were using those digital channels, so it didn't matter if the supply chain was clunky or expensive, but it's becoming the norm to shop this way."

She says the costs are becoming increasingly impossible to bare, but retailers are reluctant to ask customers to pay for something that was once free. That said, John Lewis has put its foot down and started charging for click & collect over the summer, but Larkin says this example is unusual.

"Retailers need to protect the customer offer and to do that they need to be more effective in the supply chain," explains Larkin, who notes 80% of retailers believe their supply chains are not suitable for omnichannel and need a fundamental change.

How do you modernise the supply chain?

There are a number of things retailers can do to modernise the supply chain, says Larkin, who is seeing retailers create dedicated eCommerce warehouses and automate their product picking, while others look at their transport partnerships to try and reduce costs.

"But all retailers are looking at how they flow goods through existing facilities to accommodate eCommerce," she says.

And from an IT perspective, more and more retailers are having to implementing order management systems to keep track of online orders. "Retailers with a heritage in catalogues have managed orders for many years and probably have a bit of a head-start rather than the retailers who have customers who simply walk into store to purchase."


But its shipping products from the retail store as opposed to the warehouse which is what Larkin expects to see more of in the future.

"It's because of the way click & collect developed, where a customer creates an eCommerce order, and behind the scenes the retailer pick and packs it and uses a courier to bring it to the designated store. The parcel arrives in the store, but the product might have been sitting there on the sales floor all along."

Larkin says retailers don't have the inventory control accuracy in place to have the certainty they can find the product in the store.

"It's not as straightforward as in a warehouse where you can stock count and have inventory control," she adds. "But the cost of the warehouse courier is significant and customers expect to pay nothing. For a retailer to crack that problem and retrieve that item from the sales floor and not incur the extra cost – that's the retailer who is going to win."


And Larkin believes RFID will be able to give retailers real-time visibility of stock on the shop floor, despite it not being the newest of technologies.

"RFID was very popular eight or nine years ago, when there was a trend of inventory control in the supply chain," she says. "At the time it was more costly and retailers didn't really get the benefits they'd been expecting."

Larkin believes the technology was the solution to an non-existent problem at the time, but now omnichannel has developed so rapidly in the last couple of years, the technology could solve the problems of finding stock on the shop floor. She points to Macy's in the US which is using the technology to improve stock control.

"Now there's a new opportunity for RFID to give retailers that level of stock control which might enable them to provide click & collect fulfil from store or even home delivery from store," said Larkin.