Advertisement
12/04/2020

Why Inventory and Fulfillment Will Matter More in 2021

Why Inventory and Fulfillment Will Matter More in 2021
Delivery and fulfillment trends set during the pandemic are unlikely to fade anytime soon.

The retail predictions for the new year are coming fast and furious — and while not all the crystal ball action comes off as original, there is perhaps a special poignancy to it given how urgently many people are looking toward 2021.

Some of the more recent predictions come courtesy of NCR, the payment technology and retail services firm.

Real-Time Inventory

NCR predicts that in 2021, the role of real-time inventory tools will increase, in large part because the pandemic fueled rise of e-commerce in the food and consumables space.

Consumers are demanding access to real-time inventory, and this won’t wane in 2021, NCR says. As buy online, pickup in store services and curbside delivery have surged, real-time inventory management throughout the supply chain has never been more important, according to this outlook. Today’s shoppers, wary of crowded stores, want to get in and out as quickly as possible. And if they make the trip, they expect the item they saw available online or ordered for curbside pickup to be in stock.

Yet implementation of real-time inventory technology has not caught up with demand yet. For example, only 26% of grocers have up-to-date inventory management technology, according to a recent study by RIS News and Progressive Grocer. The industry is slowly catching up, with 43% of grocers reporting that they have started a major upgrade to their real-time inventory management technology or plan to in the next 12 months. Another 10% plan to start an upgrade in the next 24 months.

Dark Stores

Meanwhile, so-called dark stores promise to gain more of the spotlight in 2021.

Online ordering will likely see a nearly 20% increase this year and is showing no sign of slowing down in 2021, says David Wilkinson, president/GM of NCR Retail. To accommodate this surge, more retailers will turn to the dark store model that has been gathering steam for years and taking off in recent months. Former brick-and-mortar shopping locations are being transformed from in-person shopping destinations into fulfillment-only centers, primarily for online orders.

Retailers in many verticals have taken this route since the start of the pandemic or plan to take it soon, including grocers, apparel, home goods and more, and the benefits are stacking up. Some retailers — Walmart provides a good recent example — are getting especially creative in this broader area. 

Changing struggling locations into dark stores allows retailers to streamline operations and re-optimize store space into thriving, last-mile, e-commerce fulfillment hubs, NCR reports. The outlook comes as more retailers devote more store space to online fulfillment roles, helping comp sales to grow in late 2020. 

With the absence of physical displays, checkout lanes and customer service queues, every square inch of the former store can be allocated to fulfillment only, allowing the dark store to carry more products and design the layout to serve pickers, not consumers. Altogether, this model can provide faster delivery times for traditional retailers, allowing them to provide same-day delivery and better compete with the lightning-fast offerings of e-commerce-only leaders.

Next year, as this model becomes more commonplace nationwide, dark stores will become increasingly sophisticated through technologies like those seen in larger warehouses, including robot pickers, for quicker and more efficient operations, Wilkinson predicts.

The Human Factor

But even with more e-commerce and related services and store associates — actual human beings — remain vital to retail in 2021, even if their roles will keep changing. 

As Wilkinson put it, retail employees today have been required to wear many different hats, and that trend will only continue into the new year. On any given day, a store associate could be responsible for a variety of actions impacting the customer experience, not simply the checkout counter.

Everything — from managing order fulfillment across different channels and curbside service, to monitoring against stock outs and troubleshooting e-commerce issues — has fallen into the purview of daily tasks for today’s retail employee. About 35-45% of consumer behaviors from COVID-19 will persist after the pandemic, primarily with digital experiences, which means store associates will continue to serve customers differently next year.