Inbound Logistics | August 2022

The rise of pickup services has given brick-and-mortar retailers a much stronger value proposition, bringing together the strengths of online and o¤ine shopping to create more choice and flexibility for customers. Merely oering these services to online shoppers, however, is no longer enough. Retailers should look to boost the e¥ciency and quality of these services through enhanced training, technology and store designs. IMPLICATIONS FOR RETAILERS • To better support pickup service, retailers need to optimize store layouts to oer better access for shoppers. Put pickup counters near the front door for easy and quick access and allocate dedicated fulfillment areas or parking spots for pickup near the store entrance. • Retailers should look to promote their collection oerings over delivery in less dense, suburban and rural areas. As these services transfer the cost and responsibility of the last mile to the customers, it can lead to less margin squeeze than a delivery service, which is more suitable for urban locations. • Retailers can highlight pickup as a more aordable alternative to home delivery, showcasing the savings associated with lower fees and no additional surcharges or tips, to retain online customers in the current inflationary environment. • The jury is still out on pickup lockers as an investment for many U.S. retailers. However, locker service has the potential to be adopted on a greater scale due to the convenience and labor-cost benefits the format has over other last-mile options. As with logistics and fulfillment automation, retailers must weigh those advantages against the investments required. IMPLICATIONS FOR TECHNOLOGY VENDORS • Because consumers must engage with retail locations to access buy online pickup in store (BOPIS) and curbside pickup, these services provide unique opportunities to generate impulse consumption versus delivery. Technology vendors should oer a functionality that triggers push notifications to inform customers of in-store oers and deals and prompts them to add impulse items to their cart once they enter the geofence. To reduce complexity, retailers can feature a limited impulse assortment, allowing store associates to easily locate these additional items and pack them into customer bags as needed. • Technology providers can add features that would help retailers identify customers who have experienced longer wait times and kick o proactive marketing campaigns to win them back. – Coresight Think Tank, Coresight Research, July 2022 RESHAPING OMNICHANNEL RETAIL

Working with PFS, the company implemented a multi-node fulllment strategy that included adding two distribution centers and turning 10 branded brick-and-mortar stores into micro-fulllment centers. The fulll-from-store plan started with non-mall locations that employees could access while stores were still closed to the public. “Critical to our ability to support that strategy was that this company already used our order orchestration and order- to-cash platform,” says Patrick Lowe, area vice president of business management for PFS. “Because we had the OMS connected to their IT infrastructure, front-end e-commerce platforms, and back-end ERP, we could open additional solutions quickly and agilely.” FROM TECHNOLOGY TO PROCESS With the technology in place to access store inventory and route orders to stores, process came next. “We shipped them the same packaging supplies that we used in our warehouse management program,” Lowe says. The shift in omnichannel to incorporate store fulllment—which remains in place post-pandemic— allowed the brand to avoid disappointing customers while also offering a new way to engage with them through curbside pickup and later, in-store pickup, as well. There’s an ancillary benet to this pandemic-forced shift: It helps reduce the brand’s carbon footprint, something that’s increasingly important to customers. Overnight and two-day shipping for premium and other brands often means the order travels rst by air, then by ground. “One way to achieve sustainability is to reduce dependency on air shipments and the time it takes to move a package from point A to point B in any kind of vehicle,” says Iqbal. “Leveraging this multi-node, dynamic fulllment network is how some brands are trying to achieve their sustainability objectives.” It’s a bonus benet of the omnichannel mix adjustment for both the beauty brand and its customers. n

DELIVERY OR PICKUP METHODS ONLINE SHOPPERS HAVE USED IN THE PAST THREE MONTHS % OF RESPONDENTS

60.9%

Two-day or longer delivery

30.8%

Next-day delivery

29.9%

Curbside pickup

Pickup services rank higher than rapid delivery by number of respondents that used the services

18.3%

Collect in-store

15.7%

Same-day delivery (but longer than one hour) One-hour or less delivery

8.6%

Collection lockers

6.9%

Other

4.1%

Source: Coresight Research, July 2022

48 Inbound Logistics • August 2022