3 Logistics Initiatives to Bolster Growth in Inflationary Retail Landscape 

A slowing economy across segmented geographies, increasing penetration of eCommerce, and changing customer expectations are stressing out the retail industry.

The 2023 Retail Industry Outlook from Deloitte reveals that apart from purchase behavior, the sociodemographic shift among the customers has triggered a change in the retailers’ role in the customer journey.

For instance, the global consumer demand for cheap, quick, and convenient deliveries has made retailers offer fast last mile services like curbside pickup, same-day delivery, and flexible payment plans.

They have come a long way from simply setting up pretty aisles with goods in their brick-and-mortar stores and are investing huge sums into digital transformation and analytics tools to deliver wherever their customers are, in whichever way they want.

This has conveniently sandwiched the retailers between demanding, price-conscious consumers and increasing operational and supply chain costs. Hence, the one-size-fits-all approach towards delightful deliveries no longer promises profitability and retailers need to reimagine their logistics initiatives to bolster growth in the inflationary retail landscape. Here are the three strategic long-term logistics initiatives they can prioritize. 

#1 – Last Mile Optimization to Reduce Supply Chain Costs 

With a 53% contribution to the total shipping costs, last mile operations can guzzle profits and eat away at the bottom lines. The pandemic boosted demand for rapid last-mile deliveries, leading retailers to provide free services to compensate for in-store sales decline.

Curbside pickup surged during the period and is still maintaining its popularity. Although free shipping has become widespread, retracting such perks is challenging, as over half of consumers abandon their carts upon learning about shipping fees.

Retailers face challenges in offering high-touch services, such as picking and packing, which can easily become costly owing to inefficient fulfillment. Additionally, they may owe fees to third-party vendors for different services. While consumer demand for faster fulfillment is expected to rise, cutting essential services risks loyalty.

Embracing automated solutions for last mile optimization can help reduce last mile delivery costs by 14% via intelligent workflows, integrated management of field and hub operations, real-time tracking, and unified communication for multiple parties.

Retailers can share real-time order movement updates with customers, offer flexible delivery options, and ensure greater adherence to delivery timelines that help elevate delivery NPS to as much as 25%.

#2 – Strategic Omnichannel Planning to Reduce Reverse Logistics Costs 

Omnichannel fulfillment is the heart of successful retail businesses, especially in fast-moving goods. However, it is plagued by a higher number of returns, nearly 30% as compared to 10% returns for in-store purchases.

According to a recent study, returns accounted for $761 billion in annual lost sales for US retailers alone. Hence, offering frictionless and cost-efficient returns becomes a core profitability constraint for retailers. 

Advanced logistics management solutions come equipped with robust features like advanced data analytics, trip planning, routing, and seamless integration with existing technological infrastructure, such as order and warehouse management systems—all accessible through a unified dashboard.

This enables businesses to seamlessly integrate all supply chain elements, resulting in enhanced visibility and reduced logistics costs for both, forward and reverse order movements. 

#3 – Digitization to Improve Margin  for eCommerce Sales

A recent survey by Deloitte revealed that 6 out of 10 retailers agree that strengthening their digital commerce offerings can be a huge growth opportunity.

The inability to ensure cost-efficient fulfillment across multiple eCommerce channels, lacking visibility over shipment movements across all of them, and inability to unify the management across multiple service providers can make multiple steep cuts in the overall profits. 

By digitizing logistics and integrating various systems, including order and warehouse management, 3PL management, and in-house tech, retailers can revolutionize their operations. This holistic approach offers 360-degree visibility, allowing for performance assessment across service providers.

Additionally, functionalities like route optimization, trip planning, and load consolidation contribute to improved efficiency, while better vehicle capacity planning and delivery slot bookings can help reduce costs across the entire supply chain.

Businesses can place automated validation checks for managing non-delivery reports, proofs of delivery, and customer feedback. This traps delivery frauds, idling, empty miles, etc., and increases profit margins for retailers. 

The future of retail is digital, customer-centric, and transcends beyond the legacy planning models. Retailers need to be cautious while aiming to delight the nuanced customers who are passionate about their convenience, and delivery preferences, and care about that little ‘extra’ effort a seller puts in.

Hence, embracing the right technology becomes a must for staying profitable, especially during inflationary times when the profit margins are thinning, competition is rising, and ways to make the customer happy are becoming fewer.

The right step is to integrate digital solutions into the core operating model and draw inferences from deep analysis of data from all business components for strategic initiatives that cut costs and weed out inefficiencies.