A difficult lesson in survival is playing out on England’s
High Street as retailers such as HMV, Jessops and Comet have all recently declared
bankruptcy. Although this is partly the fault of a dismal economy it is also
due to the rise of ecommerce.
According to the Office for National Statistics (ONS),
retailers experienced a 40% increase in turnover in 2011 over 2010 for an
estimated £21.4bn
from ecommerce sales. For the 2012 holiday season, Capgemini and the Interactive
Media in Retail Group (IMRG) estimates e-retail sales increased 17.5% and 12%
for December and November respectively. However, brick and mortar retail sales
fell 0.1% between November and December and only increased 0.3% for December,
the slowest annual growth rate for a December since 1998 according to ONS
figures.
e-Retailers such as Amazon.com and eBay have brought a new
business model to the UK’s retailing industry – stores open 24/7 via a
consumer’s laptop or mobile device, the ability to compare products and prices
in the comfort of one’s home and delivery to the consumer’s door or wherever
the consumer chooses.
This business model has brought many changes to the supply
chain –quicker fulfillment and delivery to differing end points, returns management
and payment options – just to name just a few.
As such, brick and mortar retailers are scrambling to make needed
changes in order to survive and remain competitive.
It is difficult to say good-bye to retailers such as 92
year-old HMV, 77 year-old Jessops and 79 year-old Comet but even despite financial
bumps along the way, 93 year-old Tesco appears to have figured out the new
retail industry. Tesco has diversified and invested heavily in ecommerce. In
fact, for the fiscal year ending April 5, 2012, the company’s online sales
topped £2bn.
By 2017, the company expects internet sales to increase to £5bn.
Among the many services Tesco offers is online ordering with a choice of pickup
either at stores or via home delivery; Similar to Amazon.com, Tesco allows third-party
retailers to use its website as "an online shopping mall", with Tesco
receiving a cut of every sale and recently the company announced it is
venturing into 3D shopping.
The ability to not only adapt to a changing retail industry
but also to respond to these changes with a flexible, agile supply chain is now
a necessity for retailers to survive. As more and more brick and mortar
retailers embrace ecommerce they will need to bolster their supply chain to
provide a successful multichannel experience for consumer.
Supply chain overviews of leading retailers such
as Tesco will be included in Ti’s next report in its ecommerce logistics
series, Europe e-Commerce Logistics, available in February.
