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Comment: Preparations for Christmas 2014 need to start now

Christmas 2013 was the holiday season when omnichannel retail came of age in Britain.

If more evidence was needed of a major and permanent shift towards online retailing, we need look no further than the extensive coverage in mainstream press. Articles declared how more Britons than ever did their Christmas  shopping via the internet referencing a number of indicators that found online grew by nearly 20% compared to last year and accounted for nearly 20% of all retail sales.

This Christmas confirmed the shift to online retailing has significantly changed the shopping habits of UK consumers. We now love to shop online, increasingly on a tablet or mobile, but hate waiting for deliveries as expectations around flexible fulfilment rise. And there is more change to come.

This online retail revolution continues in full swing and supply chain is proving to be the key. Retailers, whose supply chain was not ready this Christmas, suffered with delivery issues and costs hindering their performance. Even retailers that performed strongly, from a sales point of view, had their supply chain and customer service functions overwhelmed with many customers leaving it later than ever to order goods.

Consumers' confidence in flexible and fast delivery options has increased and demand over the festive period was so high it challenged even the largest carriers. It shows getting it right is harder than ever. Retailers must ensure they have enough stock in the right place, offer the right delivery options to meet customer expectations. All these factors must be addressed while still protecting profit margins. Those which failed to do so during the holiday season experienced increased supply chain costs, disappointed customers and lower margins.

Transitioning to multichannel leaves many bricks and mortar retailers vulnerable to failures in their supply chain. Retailers need to navigate a complete transformation that puts online, with its myriad of delivery options and smaller basket sizes, at the centre of a modern retail supply chain. Customer expectations are changing fast and for retailers wanting to respond, the countdown to Christmas 2014 has already begun. Retailers have six to nine months to upgrade their supply chain backbone, including supply chain planning, logistics, fulfilment and store operations or they risk another disappointing golden quarter. 

So what next for retail supply chain?

Retailers need to consider an ‘end-to-end supply chain’ while striking a balance between meeting, or even exceeding, their customers’ expectations and managing the costs associated with complex fulfilment options. They must consider the implications for suppliers, stock levels, the shape of the logistics network and store operations. Our series of articles over the last few months have highlighted some of the key priorities retailers need to address, including:

The clock is ticking. Preparations for Christmas 2014 need to start now if retailers want to be able to deliver the reliable, flexible and efficient fulfilment service that consumers will expect. Time is already running out both for those catching up and for those who want to stay ahead of the retail revolution.

Toby Paxton, multichannel supply chain lead partner at Deloitte UK, writes a monthly column for Essential Retail, detailing what retailers must consider in order to build the right supply chain architecture.

http://www.deloitte.com/view/en_GB/uk/industries/consumer-business/index.htm

 

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