Omnichannel

Supply Chain
In Focus
2014
eft, in collaboration with industry experts, explore the future of omnichannel retailing.
Whats in store?
This package includes:

Interviews and analysis from omnichannel supply chain experts

4 omnichannel presentations from supply chain executives

Opinions from 300 surveyed supply chain executives

This research was conducted in conjunction with the 5th Chief Supply Chain Officer Forum,
taking place November 18-20 in Amsterdam.
For more information, go to www.cscoforum.com/eu

Table of Contents:
I. Introduction
a. Introductory comments from Sophie Farrow, CSCO Forum Director
b. Introductory analysis from Chris Saynor, CEO, eft
II. In Theory: What does the Omnichannel Retail Supply Chain Landscape Look Like?
a. Interview with Rob Johnstone, President at Priority Express
b. E-Commerce and Logistics Demand: Presentation from Henk Folmer, SVP Global Customer Solutions at Prologis
c. Delivering to the Cities of Tomorrow: Presentation from Farhan Hussain, Director, F&S
III. In Practice: So what does this mean for retailers?
a. Omnichannel at John Lewis: Presentation from Terry Murphy, Distribution Director at John Lewis
b. The UKs Largest Multi-Brand Digital Retailer: Presentation from Chris Haighton, Head of Retail Logistics at
Shop Direct
c. Office Depots Omnichannel Strategy: Presentation from Rick DiMaio, Vice President, Supply Chain Operations
at Office Depot
d. Sears Integrated Retail Strategy: Presentation from Jeff Starecheski, VP Logistics Services, Sears Holdings Corporation
e. The View from Supply Chain Executives: Extract from the CSCO Strategy Report
f.

The View from Supply Chain Executives: Live Polling Results

IV. Conclusions
V. Interactive

This package was created in conjunction with the Chief Supply Chain Officer Forum. To get involved in the event, taking place in
Amsterdam this June 18-20, head online to www.cscoforum.com/eu

I. Introduction
Sophie Farrow, CSCO Forum Director (sfarrow)@eft.com
Over the past few months, eft have been fortunate enough to be able to hear first-hand from a variety of industry
experts how the changing landscape of retail will affect supply chain operations.
Here, weve gathered some of the best presentations, Q&As and industry research, to provide a snapshot of where
omnichannel retail currently stands, the impact on supply chain and what lies in store for the future.
We will also be exploring some of the key issues highlighted in this package at the Chief Supply Chain Officer Forum
in Amsterdam on November 18-20th. You will get to hear the biggest names in the industry discussing omnichannel
logistics and the challenges associated with it, including delivery options, returns, fraud, inventory and stock piling
and international fulfilment.
Senior supply chain executives working at a retailer or a manufacturer can attend this event with a complimentary
pass. For more information on how to get involved, head to www.cscoforum.com/eu or contact me directly on the
details above.
Chris Saynor, CEO at eft shares his views.
Why Every Retailer Needs to Be Fully Omnichannel, Which Includes Having Bricks & Mortar Stores
Omni-channel retail: It is surely common knowledge that consumers simply want an integrated, unified shopping experience. They want to buy something from a retailer in store on the phone or online and want to have the option
to have it delivered at a time and to a place that is convenient for them. That is what the retail experience has to be
now, yet most companies do not have the capabilities to offer the above yet.
.it makes me want to grab these retail execs and shout at them its not an option, you have to do this, and do it
quickly and do it well!
I know its hugely complicated and expensive, with a lot of supply chain technology involved, but the pace of change
needs to speed-up. But there are also simple things that retailers can do to give the customer a better experience.
For example I was in Palm Beach last month buying a gift at a very well know womenswear store and the customer
in front of me was trying to return something she purchased online. The sales assistant explained that they could not
accept the return as it was bought online, which is unfortunately quite common, but then compounded the situation
by trying to explain that the online store and the physical store are different companies (which they are not). Retailers need to think about the communication that they have with customers regarding their online presence and ensure the staff are informed as such.
I truly believe that bricks and mortar retailers have the potential to beat the pure online players such as Amazon, but
only if they offer the same delivery options as the online players and truly integrate their inventory, returns and customer message across all channels. Consumers want to purchase items when they want, and they want those items
delivered when they want; but the USP of being able to also offer the chance to pick up items at stores, be able to
speak face-to-face with human sales assistants, get advice, to try and test things and a place you can return and exchange items without resorting to mailing items will be very hard for a pure play online retailer to compete with
IF the bricks and mortar retailer can truly step-up their levels of automation and delivery options.

This package was created in conjunction with the Chief Supply Chain Officer Forum. To get involved in the event, taking place in
Chicago this June 11-13, head online to www.cscoforum.com

I believe that Amazon and others will in the next 12-24 months make some acquisitions or will create more partnerships with physical stores, or they will create their own bricks and mortar presence, because once (as they will eventually, even without access to Kiva robots or drones) the bricks and mortar competition catches-up, then it is the
Wal-Marts, Office Depots and Sears of the world who will be the only ones able to satisfy all of the consumers retail
expectations in 2015 and beyond. The market to look towards is the UK, which has one of the most established
online retail markets, but it is the bricks and mortar retailers such as Tesco, Argos and John Lewis that are now the
front runners. For those of you that know the UK market, my advice to Amazon would be..buy Argos.

This package was created in conjunction with the Chief Supply Chain Officer Forum. To get involved in the event, taking place in
Chicago this June 11-13, head online to www.cscoforum.com

II. In Theory: What does the Omnichannel Retail Supply Chain Landscape Look Like?
This section of the package explores omnichannel supply chain from the perspective of industry experts.

Interview with Rob Johnstone, President at Priority Express

Andrea Obston (Director of Public Relations for the Customized Logistics
and Delivery Association) interviewed Rob Johnstone, President at Priority
Express on the growing importance of same-day delivery.

Andrea: Same-day retail deliveries seem to be the hot topic for everyone in the logistics sector.
Why is that?
Rob: Quite simply, retailers have to compete with the convenience of shopping on the web and the clout of two
retail titans, Walmart and Amazon. Because of the standard these competitors have set, consumers are coming to
expect faster delivery to their doors for all items.
Amazon is getting closer to its customers every day by reducing the time it takes to process and deliver orders.
Based on Tompkins Internationals best estimates, Amazon will grow from its original eight fulfilment centers in
2004 to 54 by the end of 2014. Amazon's Fulfilment Centers tend to be 80-plus miles away from metropolitan
areas, so that they are close enough to their customers to offer same-day delivery. In New York, for example,
Amazon customers who order before 8:30 am will get delivery by 7 p.m.
When youre talking about retail drivers, you also have to talk about the Big Boy of American retailing Walmart.
Sixty-seven percent of all Americans live within five miles of a Walmart. Walmarts been combining its fulfilment
centers with their distribution centers. Every day, Walmart goes to every store. Their trucks go to the stores with
distribution items that are going to be sold on the store floor. They then take those same trucks and stock them
with the fulfilment orders that are going to that store as well. Now the consumer has three choices. He or she
can select Click and Collect and go to the store and get that item. Or, they can go to their local Walmart and
pick it up at a locker. Or, they can get a delivery right to their homes, with the use of a local courier like the
members of our association, the CLDA.
Is the Same-Day push as important for business-to-business sales?
Absolutely. Businesses love the convenience of getting as much as possible on-line. The best way to compete for
that business is to get it to them faster. This sector is twice the size of the consumer sector and, for them, online
is huge. In fact, not only are they twice as big, theyre even growing faster. More than half, of business buyers have
purchased goods for their companies online, and 37 percent say they expect to spend a bigger proportion of their
annual procurement budgets online next year, according to Acquity Group LLCs 2013 State of B2B Procurement
Study. Of business buyers who shop online, 58.5 percent say theyve made a purchase of $5,000 or more via the
web. Of those buying online, the survey found that one-third spent 50 to 89 percent of their budgets online.
Among all respondents, 71 percent said they would consider starting to order online or increase their web spending if it were easier and more convenient to browse and order online. In fact, 71 percent also said they might
leave an existing supplier if the new supplier had identical pricing and made searching for products and ordering
easier.

This package was created in conjunction with the Chief Supply Chain Officer Forum. To get involved in the event, taking place in
Amsterdam this November 18-20, head online to www.cscoforum.com/eu

According to the Acquity Group, Buyers are consuming content and shopping on a wide array of devices on consumer retail sites and theyve come to expect the same experience in their business purchasing. That might be why
44.9 percent of respondents said theyve used AmazonSupply.coma site Amazon.com Inc. launched a little more
than a year ago that sells office equipment and industrial supplies to businesses. AmazonSupply.com carries more
than 750,000 SKUs, features two-day shipping, offers business buyers lines of credit and the option to place orders
by phone. How do you compete with that? By getting it there faster.
How do retailers get into same-day to capitalize on these trends?
By partnering with customized logistics companies that give them the flexibility to respond to demand on their timetables. Members of our industry will break up shipments, store, and deliver them to the individual locations on a
shippers schedule. They offer overnight sorting and palletizing. Their experience and roots are in same-day. With
their expertise and access to technology, they can not only deliver to residential address, but many can even install
things like big screen TVs and complicated sound systems. Members of our industry have the ability to integrate
with their customers technology, allowing them to track all pieces of the stocking and delivery process. Our industry uses the same technology shippers and retailers do, right down to offering barcode and signature capture.

This package was created in conjunction with the Chief Supply Chain Officer Forum. To get involved in the event, taking place in
Amsterdam this November 18-20, head online to www.cscoforum.com/eu

E-Commerce and Logistics Demand: Presentation from Henk Folmer, SVP Global Customer Solutions at Prologis
In this presentation from the European 3PL Summit, which took place in Amsterdam, November 2013, Henk Folmer
(Senior Vice President of Global Customer Solutions at Prologis) explores e-commerce & logistics demand and the
relation to demand for industrial retail space.
See the full presentation here

This package was created in conjunction with the Chief Supply Chain Officer Forum. To get involved in the event, taking place in
Amsterdam this June 18-20, head online to www.cscoforum.com/eu

Delivering to the Cities of Tomorrow: Presentation from Farhan Hussain, Director, F&S
Farhan Hussain, Director, Strategic Accounts Automotive & Transportation Practice at Frost & Sullivan (F&S) also
shared their latest research on the future of omnichannel retailing and the impact on urban logistics: the main
themes being urbanisation, social trends, connectivity & convergence. See the full presentation here.

Farhan notes: Urbanisation will compel retailers to shrink store sizes; these will decrease 15 to 20% in size compared to the current average store by 2020. Even Wal-Mart and Best Buy are becoming smaller He added this
would directly affect the supply chain as smaller shipments of more frequent deliveries are needed along with more
inventory visibility, multiple delivery options, same day delivery, night-time delivery, click & collect, locker boxes, refrigerated locker boxes, etcF&S expect 2.72 billion Gen Y by 2020.
This generation is clearly here to stay, driving brick to click as a social trend. Farhan Hussain ended with a snapshot
of what the future of retail might look like, given the 80 billion connected devices expected by 2025. A minimum of
500 million deliveries per day powered by hybrid fleets, people volunteering to deliver goods on their way home
(lifestyle couriers) and city access guided by smart cards and e-tags

This package was created in conjunction with the Chief Supply Chain Officer Forum. To get involved in the event, taking place in
Amsterdam this November 18-20 head online to www.cscoforum.com/eu

III. In Practice: So what does this mean for retailers?

This part of the package explores omnichannel retail from the point of view of supply chain and logistics practitioners
working on these projects day-to-day. Here, we offer two presentations from the 2013 European CSCO Forum, two
presentations from the 2013 North American CSCO Forum, analysis from efts CSCO Strategy Report and industry
polls conducted at events.
The UK is leading the way in omnichannel retailing globally and below, youll see behind the strategy of two of the countrys biggest players - John Lewis, a $13 billion retailer the UKs leading multi-brand digital retailer.
Omnichannel at John Lewis: Presentation from Terry Murphy, Distribution Director at John Lewis
According to Terry Murphy, Distribution Director at John Lewis, although customers buy their products online, 40%
still want to pick these up at the store. Today customers want to order, receive and return a product however they
want, omnichannel provides that seamless experience. This accounts for 60% of John Lewis customers and they spend
more than customers that shop just in a store or just online. From a supply chain perspective, the online growth has
made the purchasing cycle more expensive as individuals dont take the product home. This growing need for agility and
breadth of offer has made it impossible to set the forecast desired by 3PLs. Another challenge is attributing the costs;
online or shop sale? See the full presentation here

This package was created in conjunction with the Chief Supply Chain Officer Forum. To get involved in the event, taking place in
Chicago this June 11-13, head online to www.cscoforum.com

The UKs Largest Multi-Brand Digital Retailer: Presentation from Chris Haighton, Head of
Retail Logistics at Shop Direct
Chris Haighton addresses one of his biggest challenges, putting returns back on the shelves as soon as possible.
Every day is a loss when these are not on shelf. Returns are bound to happen so why not make it your USP and
perhaps include free returns? See the full presentation here
After Chris Haightons comments, the European CSCO Forum focused more discussion on returns and reverse logistics. Panellists were asked: How do you operate profit? Where is the breakeven point between returns and the
amount sold?
Panellists agreed that this depended on the margins, the expected return rate, as well as the products recovery rate
of return (ideally it can be put back on the shelves at face value) which is why agility is so important in the supply
chain from both sides (reverse logistics).

This package was created in conjunction with the Chief Supply Chain Officer Forum. To get involved in the event, taking place in
Amsterdam this November 18-20, head online to www.cscoforum.com/eu

Office Depots Omnichannel Strategy: Presentation from Rick DiMaio, Vice President, Supply
Chain Operations at Office Depot
At the 2013 Chief Supply Chain Officer Forum which took place in Chicago, Rick DiMaio shared Office Depots omnichannel strategy and challenges. He charts the development of the top 5 retailers by global revenue, exploring the
trajectory of Amazon over the past 5 years. What are the key ways to win in a post-Amazon world? See the full
presentation here.

This package was created in conjunction with the Chief Supply Chain Officer Forum. To get involved in the event, taking place in
Amsterdam this November 18-20, head online to www.cscoforum.com/eu

Sears Integrated Retail Strategy: Presentation from Jeff Starecheski, VP Logistics Services,
Sears Holdings Corporation
At the 2013 North American CSCO Forum, delegates were also privy to Sears integrated retailing plans. Jeff explored the changing ways in which consumers are shopping and the impact that this has had on Sears strategy. See
the full presentation here.

This package was created in conjunction with the Chief Supply Chain Officer Forum. To get involved in the event, taking place in
Amsterdam this November 18-20, head online to www.cscoforum.com/eu

The View from Supply Chain Executives: Extract from the CSCO Strategy Report
In 2013, eft surveyed 300 senior supply chain executives working at manufacturers and retailers. Below are the results that addressed omnichannel retail. See the full CSCO Strategy Report here.
On omnichannel expansion, more than 50% of those surveyed said that they were going to expand their omnichannel capabilities within the next 12 months or were investigating the possibility. This question didnt apply to 20% of
the audience so their response does not appear in the graph below.
Its clear that as customers demand more from their shopping experience, such as multiple delivery options and purchasing choices, businesses will need to configure their distribution models, manufacturing strategies and supply chain
accordingly.

When surveyed on challenges, integration of IT systems between multiple channels was seen as the biggest concern
in omnichannel expansion. In order to avoid information silos and ensure full visibility, it is key that all technology is
aligned, especially with suppliers and solution providers. Customer satisfaction was also cited as a cause of anxiety
for respondents. With multiple channels available to consumers, ensuring stock is in the right place at the right time
and fulfilling the expectation of free and same delivery, are adding to the pressure.

This package was created in conjunction with the Chief Supply Chain Officer Forum. To get involved in the event, taking place in
Amsterdam this November 18-20, head online to www.cscoforum.com/eu

The View from Supply Chain Executives: Live Polling Results

Over the past few months, eft have also been able to poll event audiences on omnichannel retail trends. Below are
some of the most interesting statistics, giving us a snapshot of how supply chain practitioners see the landscape developing. These questions focused on the executives expectations as a customer.

No was the clear winner, however expanding on this, a panel forecasted changes to the physical retailing. Small
retailers will eventually disappear due to the high costs of setting up an omnichannel process and the mall will be full
of drop off and pick up points.

This package was created in conjunction with the Chief Supply Chain Officer Forum. To get involved in the event, taking place in
Amsterdam this November 18-20, head online to www.cscoforum.com/eu

When ordering online, within how many days do you expect your order to ship from the DC?

Rich Sherman, author and Principal at Trissential (a consulting company) shared his thoughts on the results: To no
ones surprise, consumers want what they want now. Most consumers are comfortable with a reasonable amount of
transit time that they are willing to invest in. However, they are not tolerant of service inefficiency in pick, pack, and
ship activity required to meet their order. The want it shipped the day it is ordered.
When ordering online, within how many days do you expect your order to be delivered to your residence?

From Rich Sherman, Trissential: Consumers realize the cost of shipping increases as shipment time decreases and
are willing to accept delivery time in 3-4 days to achieve a total landed cost in their comfort zone. They are also willing to pay the premium for receiving it sooner. Beyond 5 days, consumers will not tolerate transit inefficiency.

This package was created in conjunction with the Chief Supply Chain Officer Forum. To get involved in the event, taking place in
Amsterdam this November 18-20, head online to www.cscoforum.com/eu

IV. Conclusion
As omnichannel retail becomes the new normal, its interesting to explore the huge impact that it is having on the
retail and 3PL industries and I think that the industry experts in this package have enabled us to examine the future
trends in a bit more detail.
With customers demanding more and expecting a vast array of delivery options including same day shipments and
Sunday drops both retailers and their logistics partners are having to step up their game to maintain high levels of
customer satisfaction and retain their clientele. For example, talk of Amazon becoming the worlds biggest 4PL
(especially with such innovations as drone delivery and their ability to negotiate lower shipping rates) is sure to affect
the competitiveness of 3PLs, and the continuing development of the direct to consumer model will bring the role of
retailers into question. Chris Saynor, CEO of eft recently commented that click and collect is without a doubt is a
game changer for retail due to the cost of delivery, opportunity for further sales and the reductions of returns etc.
We also have to consider how omnichannel retail will affect the infrastructure of our cities and towns. The rise of
megacities (35 globally by 2025 as Farhan Hussain from Frost and Sullivan pointed out) will impact urban logistics and make
distribution more consolidated. And then we have to take into consideration challenges such as fraud, international
fulfilment and stock piling.
It is clear that omnichannel retail is going to shake up the landscape as we know it. Both retailers and 3PLs will have
to be prepared to make serious changes in order to maintain a competitive advantage but fortunately for them, new
technology, new process and a talented workshop from a new generation will aid this transition.
Sophie Farrow, eft

This package was created in conjunction with the Chief Supply Chain Officer Forum. To get involved in the event, taking place in
Chicago this June 11-13, head online to www.cscoforum.com/eu

V. Interactive
This piece has explored omnichannel supply chain trends In Theory and In Practice. Now its your turn to get
involved Interactively. Do you agree with the research and analysis here? Do you have anything to add? How
is your business coping with the connected, increasingly demanding consumer?
Whatever your opinion on the future of omnichannel retailing, were sure that youll want to share your
views. The Chief Supply Chain Officer Forum, taking place in Amsterdam on November 18-20, will give
you the chance to do that.
The forum brings together around 300 senior supply chain and logistics executives from the logistics and
supply chain industry. The event will explore omnichannel retailing, but thats not all. Supply chain big data
and the Internet of Things, demand planning and S&OP, supply chain transformation and doing business in
SE Asia and the Middle East are just some of the other topics on the table for discussion. Just take a look at
some of the executives who are sharing their knowledge on these subjects:

Ivanka Janssen, MD Global Supply Chain, Diageo

An DHaenens, Head of Logistics EMEA, Dupont

Patrick Rainforth, VP Distribution, Johnson & Johnson

Mark Teeninga, Director of Supply Chain, Crocs

Pieter Zwart, CEO, CoolBlue

Join the discussion! Senior supply chain executives working at a manufacturer or retailer can join the
event with a complimentary pass. Contact Sophie Farrow (sfarrow@eft.com) or head online to
www.cscoforum.com/eu for more details.