Suppliers will need to become more responsive as retailers grapple with an omni-channel world.
Paul Dunne, director of supply chain at Boots, told a conference it was “massively challenging” to forecast demand because of consumers’ evolving needs in an online environment.
“It’s too difficult to forecast in such a dynamic market,” he said. “The question has to be: how responsive can you [suppliers] be?”
Speaking at the IGD Supply Chain Summit in London, Dunne said the retailer expected online trade to make up 10 per cent of sales in 2015 and web sales were growing at a rate of 50 per cent year-on-year. “Who knows where that will go?” he said.
“These evolving customer needs have an impact on our business and our supply chain. From a forecasting point of view it’s massively challenging.”
Dunne said the firm was considering altering product packaging depending on the channel it was sold through. “Is it right that you have the same packaging for every situation? I think I would answer no,” he said.
He said shoppers at airports did not want bulky boxes and preferred items in bags, whereas at edge of town stores needs would be different. “We have started to look at changing packaging depending on the channel the product goes through,” he said. “We have got to be flexible in the supply chain to deliver whatever those options might be.”
Dunne added there were also challenges around integrating online and traditional retail operations. “We are looking at a means by which we can take demand from the dot com site and route that to where the most efficient fulfilment group is. This will be a massive step for us,” he said. “Getting those short lead times is more expensive than the normal way of getting things into stores.”
He said Boots planned to give customers the ability to check stock availability in stores on phones and tablets. “The customers are demanding it and we must deliver it,” he said. “This whole dynamism of the market is creating a difficult but exciting time for the supply chain.”
Dunne said Boots would be merging with US chemist Walgreens to create the Walgreens Boots Alliance in the first quarter of 2015, following an announcement in August.