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those associated with your retail estate and destroy your financial returns.


Shared distribution Efficient warehousing operations are the


heart and lungs of the retail supply chain. Having the capacity and flexibility to accommodate both growth and changes in product mix, especially when entering new markets, is critical. One way of future-proofing warehousing


operations is to consider outsourcing to a third party. As well as minimising exposure to risk, this provides access to specialised warehouse design and engineering capabilities to ensure optimum operational efficiency and space utilisation, for example, through the construction of mezzanines and/or the installation of automated packaging machinery—as volumes grow.


The majority of service providers also


offer shared-user warehousing solutions in which any retailer, of any size, can benefit from paying only for the space and staff it needs, with the flexibility to accommodate both seasonal demand peaks and organic growth. And, with retailers’ increasing


recognition that competitive advantage is achieved through product price, availability and delivery service, there is little doubt that shared distribution will be an increasingly attractive option in the future.


The final mile Few delivery companies can claim to be


best in class for both cost and service. Retailers must position themselves to take full advantage of both cost competition and specialist service provision to meet the requirements of different products, consumer requirements and geographies. Again, outsourcing the management of


this most crucial leg of the supply chain has benefits, providing access to a wide range


of delivery partners and the ability to select the most appropriate partner, without the cost of creating these links themselves. Retailers should also consider


appointing a strategic service delivery partner to oversee parcel delivery, two-man delivery and call centre operations. This reduces the retailer’s touchpoints, allowing it to focus on core business functions of design, sourcing, pricing and selling, whilst the service provider manages the customer experience from point of order, through customer service contact to final delivery interaction and returns processing.


Reverse supply chain Refunds go with the territory in retail, with


high-street retailers expecting an average returns rate of 10 percent and online shoppers returning an average 22 percent of items purchased. As pressure on margins, environmental


legislation and consumer expectations all continue to increase, efficiency in dealing with returns is imperative. The growth of “click and collect” and


return-to-store services is creating a new supply-chain dynamic depending on how retailers get the product from the stock-holding point into the store. There are traditional supply chain routes, for example, adding ecommerce orders to store-delivery replenishments, or potentially new routes via parcel carriers, pallet networks or dedicated “round robin” vehicles. This is especially relevant where drop shipping is used and where the store replenishment and ecommerce supply chains are not integrated. Whilst an accepted click and collect


supply chain model is yet to emerge, in the future, tying these additional delivery streams to the reverse supply chain—including store returns—provides an opportunity to streamline processes and improve vehicle utilisation, or carrier


efficiency on collection of store-based returns.


And, once again, an even greater


opportunity exists in relation to collaboration between retailers, allowing the customer to return goods to one retailer via another’s stores, representing another step towards the possibility of shared user-returns centres.


Recovery management As well as reducing the costs associated with


the movement of returned product, what happens to that product when it reaches the handling point is critical in order to maximise the recovery value. Value is achieved by having a range of disposition routes available for a number of different returns scenarios, with a focus on getting product back into existing sales channels quicker, through multiple channel options. This can also assist with new product


sales and customer relationship management, for example, through take- back schemes that encourage customers to buy a new product without worrying about how to dispose of the old one. In addition to helping both consumers


and retailers meet their obligations under increasingly strict legislation, more effective returns and recovery management also significantly reduces waste to landfill— with landfill tax at £48 per tonne and an escalator which will see this increase to £80 by 2014, this is a priority for retailers. Without the advantage of a crystal ball, how the retail landscape might look in another 10 years demands imagination and vision. What we do know is that the only constant will be change.


Peter Fuller is retail business unit director at logistics firm Norbert Dentressangle.


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