‘Elephant in the room’ as billions spent on omnichannel
A report from LCP Consulting has found UK’s non-food retail sector set to invest almost £5 billion in omnichannel retailing – an integrated retail experience across stores, mobile devices and internet etc – within the next five years.
A key part of this will be re-engineering supply chains to meet drastically different needs, according to board directors of major UK and US-based retailers surveyed.
The LCP Consulting report, Retail Supply Chain Management: The Omni-channel Revolution, released today (24th May 2013) reveals the Omni revolution will accelerate within the next two years.
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Phil Streatfield, retail partner, LCP Consulting, said: “In our experience, regardless of cost, omnichannel is becoming the ‘need to have’ model for the retail industry. It has almost reached the tipping-point of change or fail.”
The report includes interviews with an LCP panel, consisting of the following four leading UK-based retail experts: Graham Barnes (Supply Director, Argos), David Wild (former CEO Halfords and Group Supply Chain Director Tesco), Dino Rocos (Operations Director, John Lewis Partnership) and Neil Ashworth (CEO, Collect+).
John Lockton, md, LCP Consulting, added: “UK retail is responding actively with planned investments likely to reach £5bn over the next five years – the question is whether this is sufficient, creates the right level of flexibility for the future, and is fast enough.”
Neil Ashworth saw £5bn as an underestimate. “It’s not hard to picture 100 retailers spending £100m each on fulfillment centres,” he said.
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David Wild explained omnichannel as a defensive strategy from traditional retailers, who have too much floor space and need to justify it.
“Amazon is the elephant in the room,” he said. “It is the price leader in many areas. Its net margins are 1-2% despite its low overheads. Marks & Spencer in contrast is more like 12% net. This brings pressure to bear, so supply chains have to be slick and responsive.
“We need a single view of inventory to optimise level of stock and cut costs.”
Graham Barnes developed the point in stark terms.
“Historically supply chain has been a function focused on cost and service. Now it has a strategic, transformative role as we need to achieve much better availability with lower stock.”
