Retail CEOs want solutions to solve omni-channel challenges

MUMBAI, INDIA: A new survey conducted by PWC and commissioned by JDA software has found that despite increasing investments in omni-channel sales capabilities, only 16 percent of retailers and consumer goods manufacturers are profitable.

The findings:

Sixty seven percent CEOs said that the high cost of fulfilling orders was largely eroding their margins. Seventy one percent said handling returns from online and store orders was challenge, 67 percent noted that direct shipping to the customer was costing whereas 59 percent believed that shipments to the stores for customer pick-ups were expensive.

The CEOs asserted the reducing the associated logistics costs was not their primary focus, but improving their business operations was. Fifty seven CEOs said they spend capital on creating new customer experiences and 53 percent admitted that that they were reducing or reformatting physical store footprints to focus on expanding the e-commerce business.

CEOs admit that omni-channel is important:

CEOs are aware that profitable omni-channel is required for survival. Seventy-one percent of respondents said omni-channel fulfillment is either a high or a top priority, and they will invest 29 percent of total capital expenditure for 2015 on improving their omni-channel fulfillment performance.

Eighty eight percent CEO cited transportation and logistics as the top priority followed by improving inventory availability by 85 percent.

Conclusion:

“Every time retailers receive an online order, they have a number of options to fulfill that demand. They can pull the product from a local store, send it from a centralized warehouse or ship it directly from the supplier. The study demonstrates that most retailers lack the insight to make these decisions in a profitable manner—and are not sufficiently focused on this critical capability gap,” said Kevin Iaquinto, Chief Marketing Officer, JDA.

“The CEOs clearly understand the challenges and they know they will have to innovate if they are to be profitable while meeting customer expectations across channels. The good news is that advanced technology can help retailers and consumer goods manufacturers master omni-channel fulfillment. However, until companies fully leverage these solutions, they will fail to realize positive financial returns on their omni-channel investments.”