NRF / NATIONAL RETAIL FEDERATION, E-COMMERCE

It sounds like Forbes and NRF are reading LTD's material on the new e-commerce and the new supply chain. Good stuff.

NRF Screams Digital Supply Chain for Retailers

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Last year at this time we were talking about UPS’ missed shipments and the busted Christmas mornings for some unlucky Amazon customers. This year pretty much everyone is smiling with retailers like J.C. Penney in the US and House of Fraser in the UK both crediting online sales for strong seasons. Christmas 2014 was the end of the beginning for e-commerce.
CES + NRF = Digital Supply Chain
2015 kicked off in Las Vegas with CES featuring the latest gadgets in high tech. CNBC summarized the vibe in a headline reading “Wearables, 3-D printers, and virtual reality dominate CES”. What caught my eye is the shift away from software, cloud and other backend data management technologies and toward hardware and humanization of data. Manifesting information for deeper sensory consumption is now all the rage.
One week later at NRF in New York, the angles sound very similar. The event’s homepage opens to a video featuring Nordstrom JWN -2.08%’s President saying “today’s stores could take a page from what’s happening online…in essence the customer wants a rich experience across all these channels”. Sessions featuring digital signage, mobile payments, electronic shelf labels, sensors, and detailed location tracking all promise a shopping experience that mirrors the virtual reality getting gamers revved up in Vegas.

We are beginning to see a convergence of science fiction dreams from the Jetsons to the Matrix with reality just a few steps behind fantasy. E-commerce is now more than just omnichannel retail. It is a nascent version of the ultimate digital supply chain which senses demand constantly and responds instantaneously with personalized products.
Maturity in the Digital Age

 

I stumbled on a book recently that was written in 1960 about the phenomenon of Television then sweeping the world. Its opening chapter described an experiment conducted in 1931 using closed circuit TV to connect a manufacturer and a retailer saying that “at least two large department stores immediately applied for TV operating licenses on the theory that eventually people would shop the electronic way rather than visit the stores in person”. These retailers were prescient indeed, but obviously premature.
Now, it is definitely the time. In fact, if any retailers are still on the side-lines they’re probably not long for this world.
More worrying however is the relative inertia seen in some corners of the CPG world. Isolated as many are from consumers by their “customers”, big CPG is still very much operating a traditional physical supply chain. They are addicted to full truckloads and long production runs even as marketing teams add SKU’s and commercial teams agree to impossible delivery terms. Most volume still moves in traditional ways, but consumer behaviour is already well down the road to where the Jetsons live.
Opportunity knocks
Interestingly, retail’s budding leadership here may hide an inferiority complex. We surveyed 214 retailers way back in 2011 about who they thought had the edge in brand loyalty among digitally empowered consumers. Betraying fear of powerful product brands owned by the likes of Unilever Unilever, P&G, Kellogg K +0.42%’s and others nearly a third conceded that manufacturers would likely win.

This data point suggests that retailers believe consumer demand is equal parts shopping experience and product performance. In other words, CPG manufacturers are crazy to leave retailers in sole possession of the consumer relationship now that interaction is ubiquitous. Direct-to-home shipping sounds insane to CPG supply chain strategists, and yet retailers won’t be surprised to see it happen.
Think Big

 

I have pitched a few crazy ideas that apply here. One is custom consumer pallets shipped directly from CPG distribution centres to homes. 90 days-worth of non-perishable high value-to-cube items across, say 25 brands eliminates the retailer and ties consumer to manufacturer for life – kind of like an internet provider.
Another is formulate-and-fill-on-demand. This works for Coke Freestyle machines; why not shampoo? It is environmentally friendly, cheaper, and personalized – kind of like Invisalign braces for teeth straightening. I know these things don’t work now but they wouldn’t surprise Jane Jetson.
We are done taking baby steps. It’s time to get aggressive.