The corona-virus pandemic has wreaked havoc on the American economy with rampant unemployment, business closings, and an overall shrinkage of the economy. However not everything can be blamed by COVID-19. Even prior to these terrible past four months, the retail store space was already taking a huge hit.
In 2019, more than 9,200 retail stores shut down — and not just small mom and pop businesses, but iconic names like Macys, JC Penney, and Pier 1 Imports massively reduced their footprint, with Pier 1 declaring bankruptcy in the last few weeks.
As we make our way through 2020, chains like Payless Shoesource, Family Dollar, Forever 21, Sears, Kmart, and Bed Bath & Beyond closed or are closing thousands of stores. Experts predict a loss of more than 100 million square feet of retail space for the fourth year in a row – and that was before the virus-related shutdowns.
Why? Well, there’s one main reason:
This is at the heart of the retail industry’s crisis. E-commerce made up nearly 16% of total retail as we closed out 2019 — up from 4% during the same period of 2010. It is expected to reach 20% of all retail during the next five years. Amazon and other online retailers are gaining so much ground on brick and mortar stores that these retailers are being forced into a “if you can’t beat ‘em, then join ‘em” approach. Traditional retailers like Kohl’s, Target, and Wal-Mart have developed a strong online presence and rely on this to make up a large percentage of their sales growth.
What does that mean for the material handling world?
As the online retail sector prospers, traditional retail stores are scrambling to shift to an online platform. The need for warehousing/direct-ship processes and improving its efficiencies becomes a top priority. The E-commerce sector is welcoming newcomers at an alarming rate; most of whom have little practice or experience in setting up production and fulfillment operations. The good news is organizations like Abel Womack are at the forefront of this fast-growing movement.
Vendors who provide a wider selection of warehouse operations solutions will stand apart with a full suite of products and services to their existing customers and are well-positioned to work with the burgeoning crop of newcomers entering this growing business sector.
Full Suite Experience
Newcomers entering the “direct-ship-from-warehouse” market are open books, needing patient handholding from an experienced partner. Each will have its own special issues that require specific plans of action. Having a trusted partner by its side saves time, money, and headaches while allowing a smoother transition into the new future of retail business.
- Equipment — What is the best way to move in/move out, position, and pick/pack product?
- Product Storage/Organization — What is the best racking/shelving/binning solutions that optimize time, accuracy, and safety? How will you deal with returns?
- Maximize SKU Positioning — Making sure that all available space is used efficiently (horizontally, vertically and depth) to provide the greatest amount of pallet-SKU locations
- Warehouse Space Utilization — What else is needed in the warehouse? Staging areas? Modular offices? Conveyor systems? Designing the warehouse for optimal operational success is the model for the future.
- Software/WMS — Tracking incoming and outgoing product as well as keeping managerial controls over truck placement and employee time usage
- Labor Efficiencies — With state-of-the-art operational technologies now available, what had needed 10 workers to complete a production plan can now use 50% or less – and with better reporting and less errors
- Safety Training — A full suite provider includes in its myriad of offerings safety training and usage certification of all equipment acquired by its customers to ensure operators remain safe and operations remain functioning
- Automation/Product Flow — Although upfront costs to automation may seem prohibitive, the ROI on increased production, reduced labor costs, and reduced errors provides the right platform for a successful operation long into the future
And there is so much more. Trying to squeeze a few extra dollars off a pallet jack to an established warehouse manager is not the business model for today or the next decade of material handling. Instead, we must study the business landscape to discover who is venturing into the E-commerce/direct-ship business and offer a partnership that welcomes these newcomers with such effectiveness as to create a business partner for life.