Retail Executive

SEP-OCT 2017

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"Companies need to adapt to this growth and rapid pace of change and plan further in advance in order to be pre- pared to meet consumer demand at its peak. In particu- lar, the digital growth in the industry has been around 13 percent, which means every five years companies have to double the size of their supply chains and DCs. It is pret- ty common now to see more than 25 percent growth in certain markets, which gives companies less than three years to double their DCs and networks. This is even more challenging when you consider the lead time necessary for new buildings, automation, and training." Caldwell's point is corroborated in RILA's SRSC re- port, which states that as retailers seek to find balance between omni-channel costs and revenue growth, they realize that the supply chain is the key to profit- ably serving customers. To achieve success, the supply chain team must continue to excel at its primary fulfill- ment role, figure out how best to utilize stores that were never designed for large scale fulfillment, and develop strong capabilities in areas previously managed by oth- er groups. Supply chain success will enhance retailers' financial vitality and outlook. Galeria INNO. When it comes to omni-channel fulfill- ment, competing with Amazon, and fostering speed and agility inside the DC, Caldwell has some pearls of wisdom for other retail executives looking to elevate their supply chains from ordinary to extraordinary. MAKING E-COMMERCE PROFITABLE Omni-channel fulfillment is of growing importance to retail executives, and Caldwell's no exception. It's no secret that the consumer's love affair with e-commerce is completely incongruent with the profits it generates. Costly fulfillment space, free shipping and returns, and more hurt e-commerce profit margins significantly. According to RILA's 2017 The State of the Retail Supply Chain (SRSC) report, supply chains are not as efficient at fulfilling individual orders as store orders. Picking "eaches" versus cases, packing individual boxes ver- sus assembling pallets, and delivering to homes versus stores are the most visible omni-channel fulfillment inefficiencies. Retail supply chain executives regular- ly experience these pain points as their teams take on more and more of the fulfillment activities previously done by customers and store operations. The problem for most retailers, according to the survey results, is the inability to recover these added supply chain costs. Yet, Caldwell and his team have their fingers on the pulse of the ways to help bring profitability to their e-commerce channels via the supply chain. "Consumer demands are changing, and the e-commerce landscape has become much more complex over the years," he says. HBC AT A GLANCE ▶ Founded in 1670 ▶ HBC is the oldest company in North America. ▶ HBC's current portfolio includes 10 banners in formats ranging from luxury to better department stores to off-price fashion shopping destinations, with more than 480 stores and 66,000 employees around the world. ▶ In North America, HBC's leading banners include Hudson's Bay, Lord & Taylor, Saks Fifth Avenue, Gilt, and Saks OFF 5TH. In Europe, its banners include GALERIA Kauof, the largest department store group in Germany, Belgium's only department store group, Galeria INNO, as well as Sportarena. ▶ HBC has significant investments in real estate joint ventures. It has partnered with Simon Prop- erty Group Inc. in the HBS Global Properties Joint Venture, which owns properties in the United States and Germany. In Canada, it has partnered with RioCan Real Estate Investment Trust in the RioCan-HBC Joint Venture. Retail is a changing market, but we have always applied the fun- damentals of customer service. Always will. You want the secret to centuries worth of suc- cess — there you have it. RETAILEXECUTIVE.COM SEPTEMBER/OCTOBER 2017 14 EXCLUSIVE RETAIL FEATURE Executive By E. Harris THE MODERN SUPPLY CHAIN: EXTRAORDINARY IS THE NEW ORDINARY

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