Retail Executive

SEP-OCT 2017

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considered for remanufacturing, and remanufactured products are considered "like new" items, which have the same quality and the same price as new merchan- dise. According to RILA, beyond customer delivery, the most popular fulfillment cost recovery area is returns, with a third of survey respondents collecting fees for return shipments. Very few manage to generate fees for order handling, store order fulfillment, or returns pro- cessing. Caldwell explains that detailed, robust product information written for the target market coupled with high-quality product images can cut down on returns. "When it comes to online shopping, customers return products for one or two reasons. Either the product they received wasn't what they were expecting, or it doesn't fit. Our goal is to provide customers with the right tools and information so that they can make ed- ucated purchases and, in turn, reduce the need for re- turns," says Caldwell. HBC was founded in 1670 and is North America's oldest company and one of the most highly regarded. "We've survived the Revolutionary War, the Civil War, World Wars, depressions, the Great Recession — our company has seen it all and survived it all," explains Caldwell. So, what's the secret to HBC's longevity? "Re- tail is a changing market, but we have always applied the fundamentals of customer service. Always will. You want the secret to centuries worth of success — there you have it," confirms Caldwell. "We are constantly considering how to make our customers' experiences easier and more enjoyable. Technology is essential, and our existing logistics network does things dramatically differently from what we've done in the past. Bottom line — we are constantly rethinking how to affordably and effectively evolve with our customers." Scalability and capacity are legitimate, ongoing con- cerns for Caldwell, just as they are for most tier-one re- tail executives. I've met Erik in person, and I've seen him deliver a compelling presentation about supply chain ef- ficiency. Capacity and growth strategy may keep him up at night, but his days are filled with the demand-driven forecasting data he needs to make the sound business decisions that foster an extraordinary supply chain. C BUT WHAT ABOUT AMAZON? In retailing, there's Amazon, and then there's everyone else, seemingly anyway. To some retailers, Amazon is a four-letter word. The A-word. Many retailers are quick to identify Amazon as the main reason why consumers expect to receive supply chain services at little to no cost. What does a retailer's supply chain need to look like in or- der to win customer wallet share? "In order to win wallet share and be at the forefront of e-commerce distribution, supply chains need to contribute to the broader organi- zation's goal, including being able to offer customers a seamless shopping experience both in-store and online," says Caldwell. "Timeliness is key, and being able to deliver orders faster and more efficiently will help gain an edge against the competition." For HBC, as it is for so many merchants, that competition includes Amazon. Caldwell goes on to explain that in addition to supply chain efficiency, a unique and quality product offering is a key component to success. "A major differentiator is to offer something our competitors do not. Consid- er how your company differentiates itself in the retail marketplace — and that needs to be around product offering. For example, Saks has a distinct product offer- ing: branded beautiful products that customers cannot find elsewhere, coupled with our experiential shopping environment. We own our product; we touch the prod- uct; we buy the product; we guarantee the product." REDUCING RETURNS Perfecting the shopping experience can help overcome one of retail's major hurdles — returns. High return rates stymie the retail industry, and solving the issue isn't easy. Of all products sold, an average of 8 to 12 per- cent are returned, and the cost to return those units is two to three times more than bringing them to market. Further, the number of returns directly impacts the amount of inventory. With too many returns, inventory can be built up, even freeze production, if the returned product can go back to market. Recoverable inventory is The supply chain is no longer just about reducing cost; it's about changing the customer experience. RETAILEXECUTIVE.COM SEPTEMBER/OCTOBER 2017 17

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