Rising digital literacy among consumers and the emergence of e-commerce has transformed the world of retail logistics. These factors coupled with constant urbanization and dual-income households are influencing consumer preferences and perceptions across emerging and developed economies.
As a result, retail and e-commerce companies are in a race to adjust to the ever-changing needs of their consumers, influenced by a number of technology trends and cultural shifts. The biggest impact of these trends can be seen in retail logistics, where factors like rapid delivery and increasing mobile adoption are driving change.
Retail logistics is notorious for large amounts of siloed data and its heavy dependence on manual processes — but this is changing as retailers implement/integrate new technologies, leverage warehouse robotics and automate processes across their supply chains.
Today, we’re going to look at seven trends that have had the biggest impact on retail logistics and will continue to transform the industry in the coming years. They are:
Let’s take a look at the reasons these trends are having a significant impact on retail logistics.
1. An earlier (and longer) holiday shopping season
According to eMarketer, shoppers are visiting both brick-and-mortar and online retailers during the holiday season earlier than ever before. In fact, Statista reports that more than one-third of digital shoppers planned to start their holiday shopping before Thanksgiving in 2017.
For retailers, this means that the holiday shopping season is getting longer, beginning even before the traditional shopping kickoff, Black Friday. That means fulfillment centers, especially, must be prepared for increased demand for cycles that can span an entire quarter — perhaps longer, if you consider the returns period that extends through the month of January.
It’s unclear how the COVID-19 pandemic will impact brick-and-mortar retailers during the 2020 holiday shopping season. If restrictions are still in place or regions see an outbreak in the fall as some experts predict, it’s likely that more shoppers will turn to e-commerce for their holiday shopping needs. “As the winter holidays approach, consumers may start their holiday shopping earlier than usual to take advantage of sales,” predicts Mintel. “Overall, winter holiday shopping will be down as consumers navigate a potential recession, a presidential election, and concerns over coronavirus returning. Consumers will continue to gravitate toward gifts that focus on health and wellness and bringing people together.”
For e-commerce, a larger, sudden shift to online shopping will place added pressure on distribution and logistics networks, so e-commerce retailers and logistics providers would be wise to start developing plans to accommodate a possible increase in demand as soon as possible.
2. Continued growth in mobile commerce
Before the COVID-19 pandemic, the economy was strong, and many consumers were increasing spending. Given the widespread proliferation of smartphones, it’s no surprise that there’s been a noticeable shift to mobile commerce. As brick-and-mortar retailers were forced to shut down temporarily in the U.S. to control the spread of COVID-19, and many consumers avoided retailers that remained open as they practiced social distancing, more shopping has shifted to ecommerce. In fact, 43% of ecommerce merchants report an increase in sales during the pandemic, according to eMarketer. Product categories that increase comfort and enable people to accomplish more while staying home, such as electronics, housewares, and office supplies, saw a sudden spike in demand, while non-essentials like jewelry and consulting services saw a decrease in demand as consumers cut spending on non-essential needs.
Overall, year-over-year revenue growth for U.S. retailers is up 68% as of mid-April. As of April 21, 2020, U.S. and Canadian e-commerce retailers saw 129% year-over-year growth, and there’s been a 149% growth in all online retail orders. And according to PYMNTS’ 2020 Remote Payments Study, which examines “examines survey response data from 3,477 US consumers to learn how their reliance on digital versus brick-and-mortar commerce has shifted in the wake of the COVID-19 pandemic,” 53.3% of respondents say they used their mobile device to help them complete their most recent purchase.
That doesn’t mean that traditional, brick-and-mortar retail is dead, however. The most innovative brands are enhancing their customer experience by adopting mobile elements that, before the COVID-19 pandemic, drove foot traffic into stores, and during the pandemic have enabled many businesses to continue operations while restricted from allowing in-store shopping. One example of this is online services that allow customers to reserve items for in-store pickup, with curbside pickup and local delivery services becoming a lifesaver for many small retailers.
3. Consumer demand for omnichannel retail experiences
Savvy consumers are beginning to expect omnichannel retail experiences from their favorite brands, meaning a seamless and consistent experience across channels including online, mobile and in-person. If a customer purchases an item online, for instance, the omnichannel model means the customer can return the item to any brick-and-mortar location, regardless of where it was purchased.
For retailers that keep online inventory separate from brick-and-mortar inventory, this can quickly complicate logistics — particularly if those distribution centers are located on opposite ends of the country.
4. Embedded integration technology
Embedded integration technology is another major trend impacting retail logistics, as logistics companies recognize the need to seamlessly and reliably share data back and forth with customers. For example, real-time location tracking coupled with real-time traffic updates make it possible to optimize delivery windows. Embedded data platforms make it possible to connect and integrate data leveraging capabilities that are already built-in to the solution.
Another example is RFID technology. When integrated with other systems, such as inventory management software, RFID can provide real-time location and quantity data, resulting in fewer backorders and more accurate estimates of delivery times and shipping costs.
Embracing embedded integration technologies allows retailers to better share data throughout their supply chains, connect with customers in more meaningful ways and more effectively track inventory.
5. Big data analytics
Big data analytics opens up a world of possibilities for retail logistics operations. It helps supply chain experts identify bottlenecks and streamline the flow of goods/resources across the warehouse and the supply chain. It also optimizes routing for last-mile delivery, thus shortening order fulfillment times and enabling more businesses to offer faster deliveries to consumers.
This is done by aggregating data from several sources including weather patterns, real-time traffic, fuel prices, diversions, congestion and much more. By leveraging big data analytics (through ORION) to optimize routing, UPS was able to deliver 350,000 more packages, emit 20,000 tonnes less carbon dioxide and save 10 million gallons of gas, year over year.
Also, logistics firms can avoid repeat visits and wasted trips by using predictive analytics to ascertain the likelihood of customers being at home to receive their orders. This can be achieved by unearthing patterns, deploying savvy strategies and identifying optimal delivery times and modes for any specific address.
The 2017 21st Annual Third-Party Logistics Study shows that 98% of 3PL firms (and 93% of shippers) regard fast, accurate data-driven decision making as a major ingredient for optimizing supply chain processes and activities.
As such, utilizing software that aggregates the data, on-demand, will help retailers and logistics companies make big decisions in a flash and save time during audits and reorganization.
6. Increased adoption of collaborative robots
Robotics is already revolutionizing the future of the logistics industry. The collaborative robot, in particular, is making tremendous headway in streamlining and optimizing warehousing, order fulfillment and delivery operations. Collaborative robots, like Chuck by 6 River Systems, help to improve productivity and efficiency by streamlining picking routes and improving pick rates.
Collaborative robots are particularly appealing to retail distribution and fulfillment as the retail industry experiences significant seasonal peak periods (e.g., the aforementioned holiday shopping season). Because collaborative robots don’t require new infrastructure, warehouse operators can rent additional robots to accommodate seasonal demands and return them after the peak period. With Chuck, the average associate onboarding time is just 15 minutes, so it’s also a practical solution when you’re working with seasonal or temporary employees.
Whether it’s multifunctional or collaborative robots, driverless vehicles or wearable technology, robotization has become synonymous with automated warehouses and increased efficiency in order fulfillment and distribution operations. More and more retail distribution centers will deploy robots as the technology becomes more accurate, versatile and cheaper.
Likewise, there will be a surge in the number of 3PLs, retailers and e-commerce businesses that use the robots-as-a-Service (RaaS) subscription business model to address fulfillment needs. Coupled with the pervasive adoption of collaborative robots, this will lead to the significant growth of the global robot logistics market.
7. Growing demand for rapid home delivery
While price has long been a critical differentiator of retail services, efficient last-mile delivery is quickly becoming a close competitor. Before the COVID-19 pandemic, there was a significant uptick in the number of retailers offering same-day delivery, driven largely by consumerization and large retailers like Amazon. Supply chain interruptions have led to delays and longer delivery times in the wake of the pandemic, although these capabilities are expected to recover as the world returns to a new normal.
Retailers (particularly those in food, beverages, and pharmaceuticals) are being pressured by customers to offer same-day or next-day delivery, a demand few companies have been able to meet during the COVID-19 pandemic. Amazon is often considered the driver of the rapid home delivery trend, thanks to its guaranteed two-day delivery through Amazon Prime, although even Amazon Prime customers have experienced delivery delays in recent months as a result of the pandemic’s impact on the supply chain.
Given that 96% of Americans have shopped online, it’s a trend that’s not likely to fade into the background anytime soon. As such, e-commerce retailers that can improve the speed and efficiency of their last-mile delivery services can leverage this trend to outstrip the competition
These and other trends are the driving force of change in retail logistics. Ultimately, innovation arising from these trends will benefit not only the consumer, but also retailers and logistics companies by improving processes, boosting performance and giving companies a competitive edge.
