Are there any retailers left who aren’t feeling the urgency behind the need for more and better Logistics IT solutions to help them remain not only competitive, but viable? If so, we’re continuing to cover the seemingly daily news stories about the travails of large retailers and the shifting environment that is wreaking havoc on what were once seemingly unshakable market leaders.
Case in point, headline number one in today’s episode: “Walmart’s Customers are Too Broke to Shop”. The article in Business Insider cites Moody’s investors’ service as suggesting the megalithic retail giant is facing a “perfect storm”, threatening to hobble sales growth. Walmart’s core customers are struggling with flat income levels while deflation plagues many of Walmart’s key product categories. Add the strong dollar abroad and it’s easy to see why Walmart’s share price has lost about 16% of its value in the last 12 months.
In response, Walmart has been investing heavily in re-energizing its eCommerce segment while announcing the closure of 269 under performing stores worldwide (including 154 here in the US). What’s crucial to understand is that this realignment in retail sales strategy requires significant change and ongoing flexibility in its supply chain logistics processes and practices – the kind of changes and flexibility only achievable via robust solutions for highly responsive supply chain management like TMS applications. State of the art TMS, freight/route optimization software, fleet and yard management tools and other solutions are being widely implemented by retailers who see the writing on the wall.
The second shocking headline drives this point home. Leading eCommerce retailer (and arguably the primary driver behind the radical reorganization of the entire retail industry) Amazon to Take Air with 20 Boeing Cargo Planes. CNN reports, “Amazon spent $11.5 billion on shipping costs last year, up about 32% from the year before, and up 74% from what it was paying just two years earlier.” Between the lease deal of 20 Boeing 767 planes, their plans to field a fleet of drone delivery vehicles and the debut of thousands of Amazon-branded trucks, the eCommerce leader is clearly banking on the continuation of this massive trend in retail.
It goes without saying that Amazon’s logistics IT solutions are necessarily as innovative as their emerging strategy and it would be impossible for Amazon to execute their ambitious agenda without them. However, retailers need not be as large as these two enormous retail titans in order to identify and address these trends. Cloud-based Logistics IT solutions like TMS, optimizers, YMS and private/dedicated fleet management tools provide low cost barrier to entry for retailers operating at the regional and national level as well. More importantly, they provide the visibility, scalability, flexibility and functionality needed to thrive in an evolving retail atmosphere. Having these systems in place today will also be extremely helpful in being ahead of the competition once the new paradigm is fully settled and the “new normal” for retailing simply becomes “normal”.