Some Assembly Required: Blending Retail and Ecommerce in Home Furnishings and Furniture

Furniture World News Desk on 12/9/2020

Earlier this year, as governments issued stay at home orders and determined which retailers could stay open and which had to close, the toll on home furnishings and furniture stores was significant. In fact, a report by UBS found that, in the first half of 2020, home furnishing stores ranked among the hardest hit by permanent store closures. Across various retail segments, sales have been shifting to online channels—with ecommerce growth already jumping by more than 30%. With this in mind, it’s vital that home furnishings and furniture retailers set their sights on omnichannel profitability and reimagine their business models to grow revenue and keep overall operational costs at a minimum. By blending traditional retail and ecommerce strategies, brands are better positioned for success—but only if their supply chains are up to the omnichannel challenge.

Becoming a Data-driven Retailer

One key to mastering a successful omnichannel strategy is clear access to supply chain data. In most traditional retail settings, ecommerce and brick and mortar teams operate independently, which means that data is tracked separately and not shared across the enterprise. Moreover, each team often manually reports on their own metrics before considerable time is invested to combine and synthesize information into a meaningful format that can be used to analyze performance across the business.

The Cost of Manual Processes

Consider data on transportation performance across modes. For many retailers, effectively managing transportation may have become more complex for various reasons:

• Shifting retail sales may have left some brands spending drastically more on transportation as a percentage of sales. Ecommerce shipping modes are significantly more expensive than brick and mortar equivalents, which leaves retailers absorbing much more cost to maintain revenues.
• Expenses associated with shipping bulky and/or heavy items is an additional challenge in home furnishings and furniture.
• Omnichannel transportation modes for store replenishment, store fulfillment, BOPIS, etc., make fully understanding these types of costs more challenging.

Disparate sources of transportation data compounded by manual reporting makes it almost impossible to gain the supply chain visibility required to calculate the actual cost to serve customers in different channels. So, what’s the right strategy?

The Best of Both Worlds

Collaboration is key. For greater visibility into sales channels and transportation costs, retailers need to unify transportation management across their ecommerce and traditional practices. For a more wholistic view of transportation, they need a single platform to aggregate carrier data through all segments of the supply chain. Supply chain visibility allows organizations not only to identify potential roadblocks before they arise but also to proactively communicate any last mile delivery updates to customers in real-time via, for example, automated text or email notifications.

In addition to transportation performance, home furnishings and furniture retailers can also explore performance-based metrics on individual distribution channels, such as real-time, SKU-level data on:

• Transportation cost
• Shipping from store to consumer
• Shipping from distribution center to consumer

With this type of more granular transportation data, retailers can:

• More accurately account for product markup or shipping fees for various service levels
• Better understand loss or profit by product category
• Readily determine cost and revenue across areas like sales channel, carrier, geography, and service level

The ability to gain data-driven insights into end-to-end transportation performance allows retailers to identify strategic cost-reduction opportunities through understanding their true cost to serve, and to adjust ecommerce and traditional retail strategies more effectively.

Elevating Retail Strategies

With people spending more time at home, things like renovations, smaller scale home improvement projects, redecorating and even seasonal décor may present the home furnishings and furniture space with new omnichannel opportunities. With colder months upon us and the pandemic influencing consumer shopping habits in new ways, retailers who can leverage technology for enhanced supply chain visibility will be better positioned to adapt to emerging trends and consumer demands. By tapping into transportation tools and technologies to better evaluate cost to serve, companies can find new ways to reduce costs, improve delivery performance and enhance their relationships with customers.

By Alex Sampera is the VP of Product Management at Descartes.