Omni Package

Omnichannel

Supply Chain

In Focus

2014

eft, in collaboration with industry experts, explore the future of omnichannel retailing.

What’s in store?

This package includes:

Interviews and analysis from omnichannel supply chain experts

4 omnichannel presentations from supply chain executives

Opinions from 300 surveyed supply chain executives

This research was conducted in conjunction with the 5th Chief Supply Chain Officer Forum,

taking place November 18-20 in Amsterdam.

For more information, go to www.cscoforum.com/eu

http://www.cscoforum.com/eu

Table of Contents:

I. Introduction

a. Introductory comments from Sophie Farrow, CSCO Forum Director

b. Introductory analysis from Chris Saynor, CEO, eft

II. In Theory: What does the Omnichannel Retail Supply Chain Landscape Look Like?

a. Interview with Rob Johnstone, President at Priority Express

b. E-Commerce and Logistics Demand: Presentation from Henk Folmer, SVP Global Customer Solutions at Prolo-

gis

c. Delivering to the Cities of Tomorrow: Presentation from Farhan Hussain, Director, F&S

III. In Practice: So what does this mean for retailers?

a. Omnichannel at John Lewis: Presentation from Terry Murphy, Distribution Director at John Lewis

b. The UK’s Largest Multi-Brand Digital Retailer: Presentation from Chris Haighton, Head of Retail Logistics at

Shop Direct

c. Office Depot’s Omnichannel Strategy: Presentation from Rick DiMaio, Vice President, Supply Chain Operations

at Office Depot

d. Sears Integrated Retail Strategy: Presentation from Jeff Starecheski, VP Logistics Services, Sears Holdings Corpo-

ration

e. The View from Supply Chain Executives: Extract from the CSCO Strategy Report

f. The View from Supply Chain Executives: Live Polling Results

IV. Conclusions

V. Interactive

This package was created in conjunction with the Chief Supply Chain Officer Forum. To get involved in the event, taking place in

Amsterdam this June 18-20, head online to www.cscoforum.com/eu


I. Introduction

Sophie Farrow, CSCO Forum Director (sfarrow)@eft.com

Over the past few months, eft have been fortunate enough to be able to hear first-hand from a variety of industry

experts how the changing landscape of retail will affect supply chain operations.

Here, we’ve gathered some of the best presentations, Q&As and industry research, to provide a snapshot of where

omnichannel retail currently stands, the impact on supply chain and what lies in store for the future.

We will also be exploring some of the key issues highlighted in this package at the Chief Supply Chain Officer Forum

in Amsterdam on November 18-20th. You will get to hear the biggest names in the industry discussing omnichannel

logistics and the challenges associated with it, including delivery options, returns, fraud, inventory and stock piling

and international fulfilment.

Senior supply chain executives working at a retailer or a manufacturer can attend this event with a complimentary

pass. For more information on how to get involved, head to www.cscoforum.com/eu or contact me directly on the

details above.

Chris Saynor, CEO at eft shares his views.

Why Every Retailer Needs to Be Fully Omnichannel, Which Includes Having Bricks & Mortar Stores

Omni-channel retail: It is surely common knowledge that consumers simply want an integrated, unified shopping ex-

perience. They want to buy something from a retailer in store on the phone or online and want to have the option

to have it delivered at a time and to a place that is convenient for them. That is what the retail experience has to be

now, yet most companies do not have the capabilities to offer the above yet….

….it makes me want to grab these retail execs and shout at them ‘it’s not an option, you have to do this, and do it

quickly and do it well!’

I know it’s hugely complicated and expensive, with a lot of supply chain technology involved, but the pace of change

needs to speed-up. But there are also simple things that retailers can do to give the customer a better experience.

For example I was in Palm Beach last month buying a gift at a very well know womenswear store and the customer

in front of me was trying to return something she purchased online. The sales assistant explained that they could not

accept the return as it was bought online, which is unfortunately quite common, but then compounded the situation

by trying to explain that the online store and the physical store are different companies (which they are not). Retail-

ers need to think about the communication that they have with customers regarding their online presence and en-

sure the staff are informed as such.

I truly believe that bricks and mortar retailers have the potential to beat the pure online players such as Amazon, but

only if they offer the same delivery options as the online players and truly integrate their inventory, returns and cus-

tomer message across all channels. Consumers want to purchase items when they want, and they want those items

delivered when they want; but the USP of being able to also offer the chance to pick up items at stores, be able to

speak face-to-face with human sales assistants, get advice, to try and test things and a place you can return and ex-

change items without resorting to mailing items will be very hard for a pure play online retailer to compete with…

IF the bricks and mortar retailer can truly step-up their levels of automation and delivery options.


Chicago this June 11-13, head online to www.cscoforum.com


http://www.cscoforum.com

I believe that Amazon and others will in the next 12-24 months make some acquisitions or will create more partner-

ships with physical stores, or they will create their own bricks and mortar presence, because once (as they will even-

tually, even without access to Kiva robots or drones) the bricks and mortar competition catches-up, then it is the

Wal-Marts, Office Depots and Sears of the world who will be the only ones able to satisfy all of the consumers retail

expectations in 2015 and beyond. The market to look towards is the UK, which has one of the most established

online retail markets, but it is the bricks and mortar retailers such as Tesco, Argos and John Lewis that are now the

front runners. For those of you that know the UK market, my advice to Amazon would be…..”buy Argos”.




II. In Theory: What does the Omnichannel Retail Supply Chain Landscape Look Like? This section of the package explores omnichannel supply chain from the perspective of industry experts.

Andrea: Same-day retail deliveries seem to be the hot topic for everyone in the logistics sector.

Why is that?

Rob: Quite simply, retailers have to compete with the convenience of shopping on the web and the clout of two

retail titans, Walmart and Amazon. Because of the standard these competitors have set, consumers are coming to expect faster delivery to their doors for all items.

Amazon is getting closer to its customers every day by reducing the time it takes to process and deliver orders.

Based on Tompkins International’s best estimates, Amazon will grow from its original eight fulfilment centers in

2004 to 54 by the end of 2014. Amazon's Fulfilment Centers tend to be 80-plus miles away from metropolitan

areas, so that they are close enough to their customers to offer same-day delivery. In New York, for example, Amazon customers who order before 8:30 am will get delivery by 7 p.m.

When you’re talking about retail drivers, you also have to talk about the Big Boy of American retailing – Walmart.

Sixty-seven percent of all Americans live within five miles of a Walmart. Walmart’s been combining its fulfilment centers with their distribution centers. Every day, Walmart goes to every store. Their trucks go to the stores with

distribution items that are going to be sold on the store floor. They then take those same trucks and stock them

with the fulfilment orders that are going to that store as well. Now the consumer has three choices. He or she

can select “Click and Collect” and go to the store and get that item. Or, they can go to their local Walmart and

pick it up at a locker. Or, they can get a delivery right to their homes, with the use of a local courier like the members of our association, the CLDA.

Is the Same-Day push as important for business-to-business sales?

Absolutely. Businesses love the convenience of getting as much as possible on-line. The best way to compete for

that business is to get it to them faster. This sector is twice the size of the consumer sector and, for them, online

is huge. In fact, not only are they twice as big, they’re even growing faster. More than half, of business buyers have

purchased goods for their companies online, and 37 percent say they expect to spend a bigger proportion of their

annual procurement budgets online next year, according to Acquity Group LLC’s 2013 State of B2B Procurement Study. Of business buyers who shop online, 58.5 percent say they’ve made a purchase of $5,000 or more via the

web. Of those buying online, the survey found that one-third spent 50 to 89 percent of their budgets online.

Among all respondents, 71 percent said they would consider starting to order online or increase their web spend-

ing if it were easier and more convenient to browse and order online. In fact, 71 percent also said they might

leave an existing supplier if the new supplier had identical pricing and made searching for products and ordering easier.


Amsterdam this November 18-20, head online to www.cscoforum.com/eu

Interview with Rob Johnstone, President at Priority Express

Andrea Obston (Director of Public Relations for the Customized Logistics

and Delivery Association) interviewed Rob Johnstone, President at Priority

Express on the growing importance of same-day delivery.


According to the Acquity Group, “Buyers are consuming content and shopping on a wide array of devices on con-

sumer retail sites and they’ve come to expect the same experience in their business purchasing.” That might be why 44.9 percent of respondents said they’ve used AmazonSupply.com—a site Amazon.com Inc. launched a little more

than a year ago that sells office equipment and industrial supplies to businesses. AmazonSupply.com carries more

than 750,000 SKUs, features two-day shipping, offers business buyers lines of credit and the option to place orders

by phone. How do you compete with that? By getting it there faster.

How do retailers get into same-day to capitalize on these trends?

By partnering with customized logistics companies that give them the flexibility to respond to demand on their time-

tables. Members of our industry will break up shipments, store, and deliver them to the individual locations on a shipper’s schedule. They offer overnight sorting and palletizing. Their experience and roots are in same-day. With

their expertise and access to technology, they can not only deliver to residential address’, but many can even install

things like big screen TVs and complicated sound systems. Members of our industry have the ability to integrate

with their customer’s technology, allowing them to track all pieces of the stocking and delivery process. Our indus-try uses the same technology shippers and retailers do, right down to offering barcode and signature capture.




E-Commerce and Logistics Demand: Presentation from Henk Folmer, SVP Global Customer Solu-

tions at Prologis

In this presentation from the European 3PL Summit, which took place in Amsterdam, November 2013, Henk Folmer

(Senior Vice President of Global Customer Solutions at Prologis) explores e-commerce & logistics demand and the

relation to demand for industrial retail space.

See the full presentation here


Amsterdam this June 18-20, head online to www.cscoforum.com/eu

http://events.eft.com/eu3pl/presentations2013/Omnichannel/HenkFolmerOmnichannel.pdf


Delivering to the Cities of Tomorrow: Presentation from Farhan Hussain, Director, F&S

Farhan Hussain, Director, Strategic Accounts Automotive & Transportation Practice at Frost & Sullivan (F&S) also

shared their latest research on the future of omnichannel retailing and the impact on urban logistics: the main themes being urbanisation, social trends, connectivity & convergence. See the full presentation here.

Farhan notes: “Urbanisation will compel retailers to shrink store sizes; these will decrease 15 to 20% in size com-

pared to the current average store by 2020. Even Wal-Mart and Best Buy are becoming smaller…” He added this

would directly affect the supply chain as smaller shipments of more frequent deliveries are needed along with more

inventory visibility, multiple delivery options, same day delivery, night-time delivery, click & collect, locker boxes, re-

frigerated locker boxes, etc…F&S expect 2.72 billion Gen Y by 2020.

This generation is clearly here to stay, driving brick to click as a social trend. Farhan Hussain ended with a snapshot

of what the future of retail might look like, given the 80 billion connected devices expected by 2025. “A minimum of

500 million deliveries per day powered by hybrid fleets, people volunteering to deliver goods on their way home (lifestyle couriers) and city access guided by smart cards and e-tags”


Amsterdam this November 18-20 head online to www.cscoforum.com/eu

http://events.eft.com/eu3pl/presentations2013/Omnichannel/FarhanHussain.pdf


III. In Practice: So what does this mean for retailers?

This part of the package explores omnichannel retail from the point of view of supply chain and logistics practitioners working on these projects day-to-day. Here, we offer two presentations from the 2013 European CSCO Forum, two

presentations from the 2013 North American CSCO Forum, analysis from eft’s CSCO Strategy Report and industry

polls conducted at events.

The UK is leading the way in omnichannel retailing globally and below, you’ll see behind the strategy of two of the coun-try’s biggest players - John Lewis, a $13 billion retailer the UK’s leading multi-brand digital retailer.

Omnichannel at John Lewis: Presentation from Terry Murphy, Distribution Director at John Lewis

According to Terry Murphy, Distribution Director at John Lewis, although customers buy their products online, 40%

still want to pick these up at the store. Today customers “want to order, receive and return a product however they

want, omnichannel provides that seamless experience.” This accounts for 60% of John Lewis customers and they spend

more than customers that shop just in a store or just online. From a supply chain perspective, the online growth has made the purchasing cycle more expensive as individuals don’t take the product home. This growing need for agility and

breadth of offer has made it impossible to set the forecast desired by 3PLs. Another challenge is attributing the costs;

online or shop sale? See the full presentation here



http://events.eft.com/eu3pl/presentations2013/Omnichannel/TerryMurphyJohnLewis.pdf


The UK’s Largest Multi-Brand Digital Retailer: Presentation from Chris Haighton, Head of

Retail Logistics at Shop Direct

Chris Haighton addresses one of his biggest challenges, putting returns back on the shelves as soon as possible.

“Every day is a loss when these are not on shelf. Returns are bound to happen so why not make it your USP and

perhaps include free returns?” See the full presentation here

After Chris’ Haighton’s comments, the European CSCO Forum focused more discussion on returns and reverse lo-

gistics. Panellists were asked: ‘How do you operate profit? Where is the breakeven point between returns and the

amount sold?’

Panellists agreed that this depended on the margins, the expected return rate, as well as the product’s recovery rate

of return (ideally it can be put back on the shelves at face value) which is why agility is so important in the supply

chain from both sides (reverse logistics).



http://events.eft.com/eu3pl/presentations2013/Omnichannel/ChrisHaightonShopDirect.pdf


Office Depot’s Omnichannel Strategy: Presentation from Rick DiMaio, Vice President, Supply

Chain Operations at Office Depot

At the 2013 Chief Supply Chain Officer Forum which took place in Chicago, Rick DiMaio shared Office Depot’s om-

nichannel strategy and challenges. He charts the development of the top 5 retailers by global revenue, exploring the

trajectory of Amazon over the past 5 years. What are the key ways to win in a post-Amazon world? See the full

presentation here.



http://events.eyefortransport.com/3pl/presentations2013/130-Rick-DiMaio.pdf

http://events.eyefortransport.com/3pl/presentations2013/130-Rick-DiMaio.pdf


Sears Integrated Retail Strategy: Presentation from Jeff Starecheski, VP Logistics Services,

Sears Holdings Corporation

At the 2013 North American CSCO Forum, delegates were also privy to Sears’ integrated retailing plans. Jeff ex-

plored the changing ways in which consumers are shopping and the impact that this has had on Sears’ strategy. See

the full presentation here.



http://events.eyefortransport.com/3pl/presentations2013/200-Jeff-Starecheski.pdf

http://events.eyefortransport.com/3pl/presentations2013/200-Jeff-Starecheski.pdf


The View from Supply Chain Executives: Extract from the CSCO Strategy Report

In 2013, eft surveyed 300 senior supply chain executives working at manufacturers and retailers. Below are the re-sults that addressed omnichannel retail. See the full CSCO Strategy Report here.

On omnichannel expansion, more than 50% of those surveyed said that they were going to expand their omnichan-

nel capabilities within the next 12 months or were investigating the possibility. This question didn’t apply to 20% of the audience so their response does not appear in the graph below.

It’s clear that as customers demand more from their shopping experience, such as multiple delivery options and pur-

chasing choices, businesses will need to configure their distribution models, manufacturing strategies and supply chain

accordingly.

When surveyed on challenges, integration of IT systems between multiple channels was seen as the biggest concern

in omnichannel expansion. In order to avoid information silos and ensure full visibility, it is key that all technology is

aligned, especially with suppliers and solution providers. Customer satisfaction was also cited as a cause of anxiety

for respondents. With multiple channels available to consumers, ensuring stock is in the right place at the right time and fulfilling the expectation of free and same delivery, are adding to the pressure.



http://events.eft.com/csco/pdf/Chief-Supply-Chain-Officer-Report.pdf


The View from Supply Chain Executives: Live Polling Results

Over the past few months, eft have also been able to poll event audiences on omnichannel retail trends. Below are

some of the most interesting statistics, giving us a snapshot of how supply chain practitioners see the landscape de-veloping. These questions focused on the executives’ expectations as a customer.

“No” was the clear winner, however expanding on this, a panel forecasted changes to the physical retailing. “Small

retailers will eventually disappear due to the high costs of setting up an omnichannel process and the mall will be full of drop off and pick up points.”




When ordering online, within how many days do you expect your order to ship from the DC?

Rich Sherman, author and Principal at Trissential (a consulting company) shared his thoughts on the results: “To no

one’s surprise, consumers want what they want now. Most consumers are comfortable with a reasonable amount of

transit time that they are willing to invest in. However, they are not tolerant of service inefficiency in pick, pack, and

ship activity required to meet their order. The want it shipped the day it is ordered.”

When ordering online, within how many days do you expect your order to be delivered to your residence?

From Rich Sherman, Trissential: Consumers realize the cost of shipping increases as shipment time decreases and

are willing to accept delivery time in 3-4 days to achieve a total landed cost in their comfort zone. They are also will-

ing to pay the premium for receiving it sooner. Beyond 5 days, consumers will not tolerate transit inefficiency.




IV. Conclusion

As omnichannel retail becomes the new normal, it’s interesting to explore the huge impact that it is having on the

retail and 3PL industries and I think that the industry experts in this package have enabled us to examine the future

trends in a bit more detail.

With customers demanding more and expecting a vast array of delivery options including same day shipments and

Sunday drops both retailers and their logistics partners are having to step up their game to maintain high levels of

customer satisfaction and retain their clientele. For example, talk of Amazon becoming the world’s biggest 4PL

(especially with such innovations as drone delivery and their ability to negotiate lower shipping rates) is sure to affect

the competitiveness of 3PLs, and the continuing development of the direct to consumer model will bring the role of

retailers into question. Chris Saynor, CEO of eft recently commented that click and collect is “without a doubt is a

game changer for retail” due to the cost of delivery, opportunity for further sales and the reductions of returns etc.

We also have to consider how omnichannel retail will affect the infrastructure of our cities and towns. The rise of

megacities (35 globally by 2025 as Farhan Hussain from Frost and Sullivan pointed out) will impact urban logistics and make

distribution more consolidated. And then we have to take into consideration challenges such as fraud, international

fulfilment and stock piling.

It is clear that omnichannel retail is going to shake up the landscape as we know it. Both retailers and 3PLs will have

to be prepared to make serious changes in order to maintain a competitive advantage but fortunately for them, new

technology, new process and a talented workshop from a new generation will aid this transition.

Sophie Farrow, eft


Chicago this June 11-13, head online to www.cscoforum.com/eu


V. Interactive

This piece has explored omnichannel supply chain trends In Theory and In Practice. Now it’s your turn to get

involved Interactively. Do you agree with the research and analysis here? Do you have anything to add? How

is your business coping with the connected, increasingly demanding consumer?

Whatever your opinion on the future of omnichannel retailing, we’re sure that you’ll want to share your

views. The Chief Supply Chain Officer Forum, taking place in Amsterdam on November 18-20, will give

you the chance to do that.

The forum brings together around 300 senior supply chain and logistics executives from the logistics and supply chain industry. The event will explore omnichannel retailing, but that’s not all. Supply chain big data

and the Internet of Things, demand planning and S&OP, supply chain transformation and doing business in

SE Asia and the Middle East are just some of the other topics on the table for discussion. Just take a look at

some of the executives who are sharing their knowledge on these subjects:

Ivanka Janssen, MD Global Supply Chain, Diageo

An D’Haenens, Head of Logistics EMEA, Dupont

Patrick Rainforth, VP Distribution, Johnson & Johnson

Mark Teeninga, Director of Supply Chain, Crocs

Pieter Zwart, CEO, CoolBlue

Join the discussion! Senior supply chain executives working at a manufacturer or retailer can join the event with a complimentary pass. Contact Sophie Farrow ([email protected]) or head online to

www.cscoforum.com/eu for more details.


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