2021: The year to rethink the retail logistics

FeaturesOp-ed

The pandemic has laid bare the need for logistics systems that are fast, flexible and resilient. As all but the most essential of bricks and mortar retail has largely been shut since March, e-commerce sales have soared.

Brands like Nike, for example, saw a 75% increase in online sales thanks to the pandemic. No one was prepared for this. Even Amazon, with its large and highly advanced logistical setups, was overwhelmed.

For retailers now heavily reliant on e-commerce channels, this is a major worry. Failure to deliver products quickly and efficiently will lead to churn as customers switch to competitors that can deliver the products they want when they want.

Logistic systems need to be viewed as a competitive differentiator that can not only handle huge changes in demand but also meet evolving consumer expectations.

Time for a rethink

No doubt, the last year has spooked many retailers into action. Forrester expects logistics to be the biggest area of retail investment in 2021. However, retailers need to invest wisely. Planning beyond COVID-19 having an eye on the long-term future is paramount. We saw in 2020 for example that sustainability is a big area of concern for consumers, particularly those in the millennial and Gen Z set. Consumers are increasingly concerned about the impact of their purchases on the climate and the environment, wanting the brands and retailers they shop with to also act with purpose. From a legislative standpoint too, we can expect there to be increased government scrutiny and focus on sustainability if it is going to provide a long-term solution.

The good news is that we are seeing innovation. Businesses such as Starship are developing battery-powered autonomous robots to increase the speed, flexibility and capacity of last-mile deliveries. Being battery powered too, Starship’s robots offer the opportunity for retailers to shift towards more sustainable practices through charging via renewable energy sources. However, while robots can help with final-mile deliveries and assist in warehouses too, more innovation is needed when it comes to the rest of the logistics chain and the delivery of products to customer fulfilment centres (CFCs).

Once again innovation has come to the rescue with the creation of new high-capacity delivery systems. At Magway for instance, we are combining linear motor and control technology to magnetise tracks that propel deliveries through a network of pipes only one meter in diameter. Think hyperloop but for your shopping. One single system has the same capacity as 40,000 40-foot articulated lorry journeys a week. This allows for a huge increase in speed, flexibility and resilience as packages are delivered quickly and securely without needing to worry about road congestion or bad weather. Once products arrive at a CFC they can be offloaded to autonomous vehicles like those from Starship for the last mile. The increased speed and flexibility these systems deliver naturally boosts the customer experience as products arrive sooner.

Going green for good

That’s not all though, by connecting these new types of high-capacity delivery systems to renewable energy sources like wind or solar power, retailers can further boost their sustainability credentials. With renewable energy now costing less than fossil fuels, these systems can help lower delivery costs too. What’s more, delivering straight to a CFC in this way limits the amount of extra packaging needed. By adopting new and innovative approaches such as those offered by linear motors, retailers can benefit from an improved customer experience, lower costs and better sustainability. All of which helps future proof retailers by increasing their green credentials while simultaneously lowering their operating costs.

This year logistics is going to be a key area of investment for retailers. However, those that simply focus on quick wins, will miss the opportunity to innovate and lay solid foundations for years to come. New systems, such as Magway, built on pioneering but proven technologies offer retailers the opportunity to appeal to consumers’ changing principles. Taking time to plan investments in new approaches for the future will not only ensure the flexibility and resilience that is now needed, but also create a key competitive differentiator too.

Phill Davies, Commercial Director at Magway

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