Deconstructing modern retail and logistics’ role in it

As of this month, all eyes have been on IKEA and the city of Hyderabad as the global retail giant launches it’s first flagship store in HITEC city. Along with the excitement, comes an equal count of sketpicism and suspect on IKEA’s ability to sustain, but we believe a fundamental factor to this sustenance is it’s focus on the backbone of retail, logistics.

There are plenty skeptics who suspect IKEA’s ability to truly capture the long-elusive Indian market in the home furnishing sector. Whether it’s high prices, or lack of market penetration to scale, there are plenty speculations that go with the deep analysis of any major international brand’s entry into India. While it’s obviously too soon to call a final take on their India plans, which itself spans over a few years and multiple formats, the competitive edge can certainly be achieved through a strong logistics strategy.

Online is the new storefront
We are used to perceiving retail as purely offline, but the last few decades have showed the industry that modern consumers are absolutely ready for online retail. The meteoric rise of the likes of Amazon and others is living proof of this fact. So now that every small business has the ability to make an online store front, inventory management and last mile delivery’s dynamics have changed. Large warehouses now serve hundreds of smaller retailers, rather than one big retailer. This means that the hub now has to factor in ideas like

  • Algorithms for route optimisation and anticipatory logistics
  • Inventory management softwares
  • Hardware support for scalable automation

These are the new discussions logistics companies are now having with warehouse owners and managers. This not only calls for new strategies but a new type of talent pool that can manage these strategies against the ever growing consumer demand.

Crafted logistics solutions

As the industry evolves to serve an evolving customer base, logistics providers are now creating custom-made solutions to serve specific functions in this chain.
The typical client outreach no longer involves just the best rates, or quality service, it demands a tailored strategy for clients that adjust according to the circumstances and provides an optimised service offering. This not only saves costs for clients, but also for the logistics companies that can now assign their resources only when and where needed. For example, consider a logistics company is serving a popular grocery franchise. Responsible for maintaining their inventory, a tailored logistics strategy could be deployed wherein the supply chain elements are fed data from the store(s). These data points could be popular products, frequency of purchase, demographic information that could further help the logistics firm understand and even at some point, anticipate the demand for specific goods, thus allowing them to create optimised service delivery mechanisms. So, hypothetically, if the store insights reveal that their perishable goods are in demand, instead of deploying the standard mini trucks for all food, they could use a last mile ride sharing infrastructure like 2 wheelers with pizza bags to help restock the items, thus allowing both parties involved to save costs and reduce wasted cargo space.

The long term effect of this strategy gives way to a clearer relationship between parties and definite parameters of quality and delivery and an optimised customer service chain that begins from the manufacturing, get’s facilitated by logistics and finally leads to customer satisfaction. As India inches towards a $400 billion consumer economy (as per this study https://www.ibef.org/industry/retail-india.aspx) the retail industry’s growth is set to take interesting turns and evolve its backbone, the logistics industry with it.

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