Commerce Trends

by Manhattan Associates

Fulfilment in focus: can UK retailers deliver on customer demands?

In the fight to secure customer spend, fulfilment has become a key battleground. Consumers expect a range of delivery options and quick service – often free of charge – and many retailers are running fulfilment at a tight margin, in order to keep up with the customer.

However, for many retailers, the reality is that their delivery capabilities are not meeting shopper expectations. To understand this issue further, Manhattan Associates surveyed a panel of 50 UK retailers – here are our key findings.

Contactless payment at the coffee shop

The fulfilment landscape

Our data revealed an interesting divide in how long consumers are willing to wait for their purchase. When it comes to getting orders sent to their home or work address, almost one third (32%) of UK retailers report that their customers are happy to wait for at least two business days, provided delivery is free. Yet if shoppers opt for click-and-collect services, they are much more impatient; 16% will pay extra in return for a guarantee they can pick up their purchases the following day.

This presents a lucrative opportunity for retailers, given that click-and-collect is now very well-established in the UK and growing in popularity. Almost three quarters (72%) of UK consumers already use in-store collection for online purchases, according to our research. Meanwhile, data from OC&C Strategy Consultants predicts that the UK click-and-collect market will grow from £5.6 billion and 3% of retail sales in 2015, to £23 billion and 10% of sales by 2025.

Click-and-collect conundrum

However, click-and-collect’s rapid growth is already creating problems for many retailers. 88% report an increase in the number of out of stock experiences in stores during the past 12 months, caused by consumers browsing online before either buying in-store or using click-and-collect. Almost a quarter of retailers (22%) have experienced a ‘significant’ increase in such incidents.

The popularity of click-and-collect is effectively turning many stores into fulfilment centres. More than half (56%) of UK retailers now ship from store, with 36% of those that do not offer this at present planning to do so in future. Over a third of retailers (34%) use store stock to fulfil online orders; more than the number that use a regional distribution centre (DC) and couriers (30%), or a regional DC and the retailer’s own delivery vehicles (24%) for fulfilment. Meanwhile, one in three retailers (32%) say that their ability to fulfil orders from store is one of their top three key priorities for 2017.

Our research also shows that nine out of ten retailers now accept returns in-store. Almost half of these retailers (47%) put this stock back onto the shop floor straight away, while 39% send it back to the nearest DC first – from which it may be redistributed direct to customers or back into stores.

Winning the delivery war

Our survey shows the bottom-line value of giving shoppers a range of delivery options, but in a highly competitive market, retailers need to work harder to make fulfilment pay for their business.

With a significant percentage of retailers planning to follow in the footsteps of market leaders by investing in ship from store capabilities, finding the right technology platform to support this investment is key.

As the popularity of cross-channel services continue to grow in the UK, retailers cannot afford for its click-and-collect business to negatively impact stock availability for either in-store or online shoppers. Therefore, they need to ensure they have two things in place:

  • A holistic view of customer activity across the whole business
  • Accurate, real-time visibility of inventory in all channels

To find out how effectively retailers are rising to this challenge, download our latest report, What do UK and European customers want from the store – and how can retailers deliver?