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Michaels turns physical stores into omnichannel supply chain hubs

Michaels is using its stores as fulfillment hubs.

The Michaels Companies is leveraging its brick-and-mortar stores to fill digital orders.

In a session at the recent Manhattan Associates Momentum 2024 conference in San Antonio, "Empowering Stores for Seamless Omni-Channel Success: A Deep Dive into Michaels' Initiatives," executives from the specialty arts and crafts retailer discussed how it seamlessly integrates online and offline channels.

Dave Luke, director of e-commerce operations and Helen Morris, VP, product management of Michaels, explained how the retailer uses the cloud-based Manhattan Associates Active Omni unified commerce platform, including its order management system (OMS), to provide online shoppers as close to real-time fulfillment as possible.

"Delivery in one to two days has become table stakes," said Luke.

Michaels launched its e-commerce effort in the U.S., using the Manhattan Associates OMS, in 2018. The company then began offering same-day delivery in partnership with Delivery Solutions in 2020 and added curbside pickup of online orders in 2021. In 2022, Michaels implemented its ship-from-store hub model.

Initially, Michaels operated more than 1,000 active ship-from-store locations, attempting to fill, complete and source orders in a zone close to the customer’s home. Without any prioritization of a specific store or location, assortment inventory was spread evenly across different stores, leading to orders shipping completely less than desired, leading to split shipments and higher fulfillment costs.

Mismatches in labor and order allocation led to additional increases in order processing time and days it took to complete deliveries.

To address these issues, in 2023 Michaels designated 50% of the stores participating in its omnichannel fulfillment program as “peak stores” due to their heavier order volume. The retailer increased the inventory of standard basic assortment SKUs in peak stores to raise the likelihood of orders shipping complete and reduce split shipments. Michaels also integrated this order model into its Manhattan Associates OMS to further refine allocation logic the solution used for its ship-from-store orders.

Since that time, Michaels has also attempted to mitigate the impact of its complex assortment, which ranges from home décor items to arts and crafts materials, with a pick path optimization feature that presents a store pick list for omnichannel orders in the most efficient order to be placed.

The retailer has also developed a pick to slot capability to enables store associates to pick multiple orders at once but keep them organized by order. Associates use handheld devices equipped with Manhattan Active Omni software to pick orders on the sales floor.

Other omnichannel fulfillment options Michaels provides at its stores, enabled by Manhattan Active Omni, include buy online, pick up in store and same-day delivery. Associates leverage belt printers to print BOPIS pickup labels, same-day delivery labels and UPS/USPS shipping labels.

Store associates place BOPIS and same-day delivery orders on a self-serve pickup rack at the front of the store. This allows both customers and representatives from same-day delivery partners to pick up orders without associate assistance.

"In stores where self-serve racks are kept neat and organized, we see a positive impact on net promoter score and overall satisfaction," said Morris.

Luke and Morris also reviewed success metrics of Michaels’ omnichannel fulfillment program:

  • Average BOPIS order is picked is under one hour.
  • Average curbside order is brought to the customer in 3.5 minutes.
  • Ship-from-store orders were processed in an average of 0.52 days in 2023.
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