Retail’s New Reality? What you need to know….

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Shopper in a supermarket. The “Supply Chain Shaman”, Lora Cecere, recently posted her four key concepts for building a demand-driven value chain. If you haven’t already read it, the post is here. I’ve already discussed her first three concepts in parts 1, 2, and 3, and today I’d like to wrap things up with a final post on her last one, “The role of the store”. She writes: 

Retailers have made large profits from B2C endeavors, but the tide has gone out. Store profitability has declined. They are being attacked in the store by online retailers. However, the store will not go away….Retail needs to be about serving the needs of the consumer. It should be a discussion of value. Execution matters. The supply chain matters more than ever. In the last decade, we have only automated B2C. It is time to redefine the retail supply chain for value and redefine the role of the store. Retailers, like hospitals, have had weaker supply chains than those of their suppliers. They have automated B2C and run their stores like it is business as usual. They have squeezed their suppliers and not owned their value chains. I think that it is time for a change.

Again, this is good stuff. When I read this I immediately thought of what Jim Tompkins, of the leading supply chain consulting firm Tompkins International, is talking about in his new “Amazon Effect: Retail at the Crossroads” video. If you haven’t already watched the video, do it now. It’s quite fascinating. It discusses Amazon’s recent announcement that it is opening up a brick-and-mortar store and what that means for traditional retailers.

I believe that both Jim and Lora make some really good points. Retailers are at the front lines of the battle to become demand-driven. To successfully weather the Amazon effect, retailers must do a better job of responding to the end consumer. To do this, they must strike the right balance between e-commerce and physical stores, and do a much better job of leveraging inventory in the store.

I believe a key part of the equation for retail’s new reality is a many-to-many network. This type of technology can scale across an unlimited number of SKUs and manage inventory at the item level in real time. It gives retailers real time visibility into the farthest reaches of their supply chain, and allows them to easily collaborate with their trading partners and customers on single platform.

What do you think? Please share your thoughts via LinkedIn and Twitter….

Greg Brady