Retailers Are Building Fulfillment Centers and Adapting Mobile Tech to Address Consumer Behavior Shifts
According to a new research report by SOTI, the mobile and IoT device management solutions provider, despite delays, product shortages and rising costs that continue to plague the retail and supply chain industries being felt firsthand by consumers, it has done little to lower their shopping expectations.
The company’s report, which includes 10,000 interviews with adults age 18 to 65 years old between Nov. 20 and Dec. 2, 2021, aims to understand how consumer behaviors are changing due to the global pandemic, increased inflation rates and supply chain availability issues, as well as expectations being put on retailers to deal with them.
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From its survey, SOTI found more than half (52 percent) of U.S. consumers have noted items becoming more expensive while 61 percent of shoppers have found one or more items are no longer available for immediate purchase. Both have led to customers to turn to alternative products or to different retailers to find items in stock.
Often, the change of retailer or brand is also due to a consumers’ unwillingness to wait. Almost 65 percent of consumers told the company they shop with brands that can deliver goods the fastest. The report also found that 57.3 percent of consumers are less likely to order an item that requires shipping from overseas than a year ago and 56.2 percent find shipping time the most frustrating aspect of ordering online.
“Delays in the supply chain during the height of the pandemic led to a negative domino effect on the entire ecosystem,” said Shash Anand, vice president of product strategy at SOTI. “We saw this during the latest holiday season, for example, with a surge in consumers shopping online versus in-store and the pandemic causing international ports and facilities to close due to employees testing positive. Retailers who did not and are not using technology to manage these supply chain stresses face the risk of hurting their bottom lines and losing their most loyal and valuable assets: customers.”
Moreover, Anand told WWD, the company’s report found that the shipping experience is disrupting the buying experience — something that was never the case before with shipping being an afterthought when looking at the retail ecosystem.
During the pandemic, consumers have also become more accepting of new forms of delivery. According to SOTI’s findings, 83 percent are more open to in-home delivery by any method and 72.7 percent are open to delivery at a designated drop-off point. More than half (59.3 percent) said they would consider either autonomous vehicles or delivery drones in the future as well.
“We also learned U.S. consumers require more communication and information from retailers and demand transparency and flexibility,” Anand said. “Close to 70 percent expect to know where their order is within the delivery process at all times. Close to 50 percent would be more likely to shop from a retailer’s store if multiple return points are offered, while close to 35 percent state knowing who a retailer’s delivery partner is influences whether they complete an online order with a retailer.”
Consumers’ current sentiment toward shipping has put in effect a number of behavioral changes including an uptick of shoppers looking online rather than in-store (49.1 percent) and many U.S. consumers opting to buy online, pick up in-store (BOPIS). When U.S. consumers were asked which habit they would continue, 72 percent said they will continue to buy online and have purchased either picked up or delivered, 54 percent said they will shop in-store and 59 percent said they will opt to pick up purchases in-store whether bought in-store or online.
“The rise in popularity of BOPIS has helped retailers to drive customer traffic back to stores opening new opportunities for revenue and to interact with consumers,” Anand said.
BOPIS benefits businesses in two major ways: It eliminates third-party carriers from the transaction, allowing retailers to create an end-to-end experience for shoppers, and it increases profits by cutting out expensive shipping costs.”
To ensure a positive online shopping experience in today’s retail landscape, Anand told WWD, “Retailers need to find a way to accelerate innovation and implement technology to communicate with consumers and partners, while also taking into consideration the fact that we’re still very much in a state of flux — this places a premium on the need for flexibility and scalability. By building apps faster and managing mobile and IoT devices in one place — whether in-store, manufacturing or warehouses — retailers can manage these changes quicker and most importantly keep consumers happy.”
Further, he said, “Retailers should consider integrating handheld and wearable barcode scanners, printers, radio frequency identification devices readers, GPS-enabled tablets and data collecting apps to stay communicated with employees and logistics partners to relay information quickly to consumers. Beacon technology, IoT sensors and mobile POS systems are also creating immersive and interactive experiences that are simplifying the shopping experience for both consumers and retailers.”
Put simply, prices, consumer choice, delivery, availability, location and convenience have effectively become the new drivers of shopping behavior and all retailers need to be thinking with this in mind.
“Retailers are now required to offer speed and flexibility, putting them at risk of losing customers if both shopping and delivery experiences aren’t seamless,” Anand said. “What retailers, small or large, need to keep top of mind is that the era of mindless ‘add to cart’ is over — shoppers are more mindful of the entire shopping journey — from clicking to shipping. Consumers now care about how the supply chain operates in the background due to its impact on the rising prices of their favorite product and overall satisfaction. They want to know if trucks are on the roads if there are stocked shelves in stores, and the exact wait times for orders and package deliveries to their doorsteps.”
As major retailers and logistics partners look for an immediate solution to their state of flux and losing customers many, including Walmart, are building automated fulfillment centers next to existing stores and expanding local delivery services to ensure a positive online shopping journey while cutting off the middleman.
“Major retailers and logistic partners must make informed decisions on where automation can create the maximum value, reduce supply chain risk and improve reliability,” Anand said. “Warehouse productivity and lessening the physical labor on repetitive tasks are key aspects of incorporating robots and other automation solutions. This allows companies to have their labor focused on providing value-added services. Companies are then able to gain better visibility into their operations and work toward a more seamless integrated experience.”
Anand also pointed to mobile tech as an important step for retailers today. “To achieve consumer satisfaction and transparency in the shipping process, technology from different systems, devices and locations must talk to each other and experience the highest possible levels of uptime,” he said. “When they don’t, retailers are unaware of what’s happening in their supply chain and that is when customers get frustrated.”
Anand said some trends in this area include:
• Augmented reality: AR is the digital version of “try before you buy” and lets people envision how what they’re interested in purchasing will look and feel. One of the main benefits of AR is that it reduces the need for returns. Instead of purchasing a product, taking it home and then trying it out, AR allows customers the same experience either in the store or at home.
• Investing in mobile tech: Retailers need to know what their devices are doing and proactively identify and resolve issues quickly and on the first call. They should look at lost productivity due to device downtime, missing devices, slow remediation times and where they lost sales — this can all be tracked with mobile technology
• Artificial intelligence: For retailers, AI can result in increased loyalty and repeat buying. With AI they can leverage buying history, serve up specific items the customer will like the moment they enter a store, and even offer similar products based on seasonality and average purchase price.
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