Recap: Retailers talk e-commerce, and more, at RILA conference
Retailers are finding unlikely camaraderie in their quest for greater market share: their competitors. With a handful of e-commerce giants continuing their stronghold on consumer pocketbooks, this year’s RILA (Retail Industry Leaders Association) Retail Supply Chain Conference allowed ‘big box’ and traditional retail leaders to come together in pursuit of new ways to stay ahead.
The motivation is clear when you consider the emergence of e-commerce. Traditional retail and consumer non-durable distributers were the two most active users of industrial properties from 2010 to 2014, according to a new JLL report, with e-commerce ringing in at third among large industrial property transactions nationally.
But the tables have turned. Today, e-commerce is the most active occupier of distribution and fulfillment facilities, while traditional retail distributors have dropped to fourth place. Pure-play e-tailers and omnichannel retailers continue to build out their logistics footprints.
The sense that “we’re in this together” was palpable throughout the conference, as attendees discussed key industry challenges like improving last-mile performance and solving labor availability issues. Following are three of the most talked-about topics at this year’s RILA conference:
1. Us vs. them no more
Keen to compete against the e-commerce giants, retail leaders were unusually transparent in sharing ideas and best practices this year. Some are reconfiguring their real estate footprints. Others are taking the “if you can’t beat ‘em, join ‘em” approach and going online. Most are actively blending online and brick-and-mortar stores into an omnichannel strategy, which is by far the most successful.
All are grappling with the quest to give customers everything they want, without losing money.
The question of costly reverse logistics came up in panel discussions and informal conversations throughout the conference. How can retailers reduce the high costs of returns without sacrificing customer satisfaction? While there’s still no right answer, everyone’s asking the question.
This sense of a shared pursuit was also evident in another surprising place: a political discussion with CNN analyst Ron Brownstein. Political topics continue to be hotly debated, but there is overwhelming support among retailers for infrastructure modernizations. While questions abound as to exactly how and where these improvements would be implemented, retailers agree that infrastructure modernization will help their cause.
2. The Holy Grail of last-mile fulfillment
Aside from the largest e-tailers, U.S. retailers have yet to crack the code on last-mile fulfillment, although some are getting closer. Though not as poised for the final mile as e-commerce titans have become, major retailers are closely examining tactics to get there. Some are leveraging their traditional networks, and partnering with third-party providers is gaining momentum.
This new openness to third-party logistics providers (3PLs) is a significant change, considering that many retail chains have traditionally sought to retain control by keeping logistics in-house. Now they have good reason to change their tune.
Large 3PLs are offering new technology-driven solutions for expediting deliveries, and often can provide cost-effective, fast delivery in major metropolitan areas and suburban markets alike. Crossing that final mile to the consumer’s door can be a lot more economical with a major 3PL than with in-house resources alone.
3. Growing focus on HR strategy
Another running theme throughout the conference was the need to recruit and engage talent, from promoting the employee experience in distribution centers to encouraging true leadership and innovation throughout the supply chain. “Hire those who are smarter and more driven than you. They will make you better,” advised keynote speaker Greg Sandfort, CEO of Tractor Supply Co.
Improving recruitment and retention isn’t just about inspiring more committed employees. Retail leaders also talked about tackling the dual challenges of rising wages and labor shortages in e-commerce hubs like Eastern Pennsylvania. One solution? Expansion into the Midwest, with Indianapolis, Columbus, Cincinnati and St. Louis all ranking top-10 nationally in e-commerce deals.
Transparency and camaraderie prevail
The RILA conference proved an opportunity to discuss an industry that is at a crossroads. Will 3PLs cure costly logistics infrastructure? Will brick-and-mortar retailers win or will omnichannel be the way of the future? There’s no crystal ball, of course, but judging from this year’s conference, we can expect another dose of clarity and even more shared strategy next year.