Reimagining Retail Fulfilment Models, 2023 & beyond!

In the era of burgeoning e-commerce and evolving consumer demands, traditional retail supply chains are undergoing a radical transformation.
The once dominant model of big, centralised distribution centres (DCs) is being reshaped by the increasing prevalence of online shopping and the need for faster, more agile fulfilment.
Similarly, the advancements in data science, Business Intelligence & AI, and machine learning are transforming supply chain management.

How are these changes shaping the future of retail fulfilment centres? Let’s check out through the lens of recent retail and ecommerce trends:

The Evolution of Distribution Centers: From Big to Fast

The shift from large, centralised distribution centres to smaller, local fulfilment centres is gaining momentum. How do these models differ in terms of space optimisation and speed of delivery?

Conventionally, large distribution centres (DCs) centralise goods from suppliers, dispatching them to stores, across regions, at scheduled intervals.
This is in stark contrast to today’s decentralized micro fulfilment centres' focus on speed , and proximity to customers.

While the centralised DCs offered an advantage in terms of space utilization and scheduled deliveries, the new-age local centres are excellent since they are compact, and strategically located within urban landscapes, ensuring swift delivery within an hour.

Most of these micro fulfilment centres, typically 100,000–150,000 sq ft, are revolutionizing last-mile delivery, drastically reducing costs while aligning with consumers’ demand for faster service. This has led to onset of the rapid retail or quick commerce as promising retail model especially within the grocery and FMCG segment.

How Supply Chain is evolving in the Age of Swift Deliveries

With e-commerce penetration soaring 30% higher than pre-COVID-19 levels, consumers now expect instant deliveries. To cater to this, retailers are redesigning their ‘slow ’ supply chains into ‘faster’ models, focusing on within-store, around-store, and neighbourhood( known as hyperlocal) operations. The uptick in ship-from-store by 7.5% and on-demand delivery by 17% during peak season signals a significant shift.

Towards a Data-Centric Supply Chain Model?

Retailers are leveraging data science, machine learning, and AI to streamline logistics operations. This coupled with heightened consumer expectations for swift deliveries is fuelling supply chain disruption.

Modern customers demand agility and promptness beyond the capabilities of central DCs. As a result, retailers are reimagining their supply chains, envisioning ‘fast-twitch’ models that cater directly and rapidly to customer needs. There is greater interest amongst the industry players to align with these cutting-edge technologies to implement a data-driven supply chain system.
This is helping them meet faster delivery SLAs, optimize inventory management, and ensure a seamless flow of goods throughout the supply chain.
Additionally, such a data-centric approach to analyse key performance indicators and fulfilment centre data is enabling them to optimize operations, identify bottlenecks, and create end-to-end visibility.

Omnichannel Fulfilment: Reinventing In-Store OperationsBrick-and-mortar locations are no longer mere shopping venues but multifunctional spaces accommodating same-day fulfilment options like Buy Online, Pick Up In Store (BOPIS) and curbside pickup.

This shift has spurred a 76% growth among retailers offering BOPIS, underlining the significance of restructuring retail spaces to align with evolving consumer preferences. Initially gaining traction during the COVID-19 outbreak, this click-and-collect approach became a game-changer for retailers, the momentum behind BOPIS has not waned post-pandemic.

Retail Stores Doubling Up as Micro Fulfilment Centres

Additionally, retail stores are also doubling as micro-fulfilment centres facilitating hyper-local instant deliveries. This innovative approach offers multifaceted advantages to both retailers and logistics players, reshaping the dynamics of order fulfilment and delivery services.
By utilizing the inventory available at retail stores for fulfilling online orders, retailers can maximize the utilization of stock.

In summary, retailers are leveraging Big data ,AI and automation to align with changing consumer demand for speed and convenience, thus paving the way for futuristic opportunities for all the stakeholders involved.

And in doing so retailers are not only enhancing customer satisfaction but also paving the way for sustainable, scalable operations in the future.