Germany is struggling with digitalization.
Recently, in 2019, one of the largest German mail order companies has announced that it will cease production of its paper-based catalogue and will henceforth rely entirely on the online channel. In the same period, the delivery of fresh food products in the UK, the US and Asia has achieved almost full coverage of online shopping.
To a certain extent, this is certainly due to a certain mistrust of new technologies in parts of the population. However, as a result of the Corona crisis, many processes have now become standard virtually overnight: contactless payment or deliveries to the front door and contactless parcel acceptance. These are just a few of the issues that show us that we in the retail sector not only need to think about further digitalization, but also implement and use it quickly. This is the only way for the retail sector to become and remain crisis-proof.
Retail is still too vulnerable in logistics and not flexible enough
When I look around the German retail sector, I see that we have perfected our supply chains and supply relationships down to the last screw. However, in recent weeks it has also become very clear that flexibility and the ability to react quickly in new or critical situations has fallen by the wayside.
For example, a rapid multiplication of transport capacities was not feasible despite available food in the central warehouses. This is often caused by rigid order and delivery schedules, fixed capacities in delivery by limited assortment specific truck types in the own fleet or fixed purchase quantities with the transport service providers. Storage structures that have been optimised for years do the rest - necessary, structural requirements such as temperature and humidity, as well as the fulfilment of legal requirements for the separation of product areas have been structurally established.
Lack of flexibility in the supply chain
The situation in the fashion industry is completely different, yet similar, with regard to a lack of flexibility in the supply chain: The spring collection is in overcrowded warehouses and at the same time the summer collection is already on its way to Germany by container ship. All this with stores closed for weeks on end. Here, the logistics departments are desperately trying to find additional storage capacity for the goods arriving by sea - and at the same time to deal with the now defunct store deliveries, but contractually agreed reductions in transport capacity. At the same time, higher volumes have to be served via the online sales channel. In some cases, retailers fail simply because of a lack of transparency regarding stocks or availability of articles in stores and warehouse locations.
Inventory transparency and flexible delivery models!
Many areas of online business are only stepmotherly developed. Offline and online business models are not able to interact seamlessly.
We are also not prepared to map the burden of stationary trade online now. And even "big players" and pure online retailers like Amazon are experiencing delivery problems.
"We must seize the opportunity to use innovations in IT and cloud-based business models to achieve real-time trading of transport capacities and the exchange of transport requirements across company boundaries. Only in this way can capacities be adapted in a highly flexible, fast and simple manner."
Consistent inventory transparency down to the individual store can help to serve online orders directly from there in the future. Here, the branch becomes a "mini-storage location" that can flexibly process customer orders on site despite being closed. At the same time, the branch can expand the local, personal approach to customers to its advantage - and thus ensure that customer loyalty is strengthened even in times of distance. This service should be available as standard in the future.
Customers will be able to order online with 24/7 availability from the comfort of their own homes, as well as shopping offline with personal and comprehensive advice at the branch. Direct online contact with the salesperson in the store via video chat is also conceivable. In this way, customers can take advantage of all the benefits of the respective sales channels on an individual basis.
The last mile to the end consumer ...
I see again and again that the stationary trade but also many other businesses, such as the catering trade, are switching to orders via the online channel, but do not automatically consider the last mile to the end consumer.
In addition to the call for self-collection, one of the decisive advantages of online ordering for consumers is the possibility of convenient (contactless) delivery to their front door. Intelligent solutions are required here to ensure that the costs of delivery via CEP/transport service providers do not eat up the margin or make the offer unattractive due to increased transport costs.
Here, for example, I see the chance to use and implement the ideas of various startups. These consist of delivery according to the "over" approach in passenger transport. This means that anyone who has capacity, interest and a destination in the area reports their free capacity in the form of a free trunk or a bicycle bag from a bicycle courier and receives and delivers the goods. Everything has already been prototypically tested here, from the order and confirmation to mobile apps and insurance arrangements in the event of damage or loss of the goods.
Controlled ramp-up of the supply chain
The key figures and the assessment of the general situation of the Covid 19 pandemic by the Robert Koch Institute (RKI) can not only serve as a basis for political decisions, but also as a basis for companies to assess the resurgent demand and thus the supply chain.
We are currently experiencing a change in consumer behaviour: During the crisis, the population has become accustomed to "indoor consumption", i.e. people are cooking more themselves and going out less, consumption is very restrained. For the logistics strategy of companies, this means that even after the crisis, the "normal state" before the crisis cannot be expected, but that the ramp-up of the supply chain and the associated bookings of transport and storage capacities must be made in small doses.
