THE CHANGING ROLE OF STORES IN MEETING CONSuMER DEMAND

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As retailers continue on the journey toward meeting consumers’ omnichannel order fulfillment expecta-tions—and doing so in a cost-effective manner—the brick and mortar store is emerging as a key enabler. Increasingly, merchants are leveraging their stores as miniature distribution centers from which online orders are picked, packed, and shipped, or prepared for in-store pickup. In fact, Target.com president Jason Goldberger recently revealed that as of June 2015, a quarter of all digital orders placed at Target.com are picked up at or shipped from a store.

That trend isn’t exclusive to Target. Insight from the UPS Pulse of the Online ShopperTM survey conduct-ed for UPS by comScore indicates that the growth of cross-channel shopping continues. In fact, 36 per-cent of consumers cross online and offline channels on their path to the purchase, and 48 percent have chosen ship to store or pick up in store.1 In theory, the approach makes perfect sense for a few reasons:

• Stores can serve as logistics nodes without incur-ring the additional cost of a DC,

• Stores enable shorter delivery zones that speed last-mile logistics,

• In-store pickup of online orders drives incremental store traffic and add-on sales.

Learn how omnichannel retailers are meeting order expectations by leveraging store networks for fulfillment — and how smart logistical execution is helping retailers mitigate markdowns and preserve margins.

1UPS Pulse of the Online ShopperTM, 2015 2Infinite Analytics, http://www.infiniteanalytics.com/consumers-shop-online-the-most-during-their-lunch-hour/

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What’s more, some early concern about the operational challenges associated with store-level fulfill-ment of online orders has been addressed, in part by the dynamics of the very consumer population creating the demand. The majority of online orders are placed between noon and 10:00 PM, with a conclu-sive peak at the noon hour.2 This gives properly-equipped store per-sonnel ample time to pick, pack, and prepare orders for next-day shipping at a marginal cost within the existing framework.

ImprovIng AllocAtIon to optImIze omnIchAnnelMost retailers have learned, however, that store-level fulfillment of online orders requires improvement of inventory accuracy to accommo-date allocation optimization. No merchant wants to sacrifice on-shelf availability to online demand.

As omnichannel rapidly matures, RFID (radio fre-quency identification) has been called back into action to serve on the front lines in the battle for inventory accuracy. Several leading retailers have announced plans for RFID adoption to support their omnichannel inventory initiatives. Supply chain intelligence gleaned via RFID informs the store allocation decisions that ensure the nec-essary presentation and buffer stock at the store level. It also holds great potential for supporting smarter decisions regarding last-mile logistics in buy online/ship-from-store and pick-up in-store scenarios. RFID provides the store-level inven-tory visibility that supports a quick and seamless receiving/pick/pack/ship effort at stores.

UPS offers multiple solutions to assist merchants of all sizes with the implementation of the new processes necessary to support last-mile omni-channel logistics. Consultation services from UPS Customer Solutions include a time study, in which UPS retail logistics experts monitor store oper-ations and aid in the design of an omnichannel logistics approach that’s minimally disruptive to store operations. That design might include the merchant’s existing systems, shipping tools from UPS, inventory visibility, OMS (order manage-

ment system), and WMS (warehouse manage-ment system) solutions from any number of UPS Ready® certified integrators and software part-ners, or a combination thereof.

UPS Customer Solutions also uses a Network Optimization tool that can help merchants choose the best store location to pick and pack online orders, ensuring the best coverage at the least cost. The software solution collects and analyzes ordering patterns, inventory standing and loca-tion, price history, and consumer location data to arrive at the most economical approach to last-mile logistics. In addition to the assurance that shipping costs are held to a minimum, the approach helps retailers protect in-store inventory levels for walk-in consumers while optimizing full-price sales through markdown avoidance.

While facilitating store-level omnichannel ful-fillment and logistics requires some degree of process and technology change, it’s becoming a modern retail consumer experience imperative.

learn more about how UpS helps optimize omnichannel logistics at ups.com/retail.

to download the UPS Pulse Of The Online Shopper Study, go to ups.com/insideretail.

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