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Today’s retailer has more competition than ever. Not only are big-box chains still a factor, but retailers also have to face consumers turning to e-commerce platforms like Amazon for a quick and easy shopping experience.
To help their retail members remain competitive, True Value Company has enhanced its ship-to-consumer initiative. This aligns with True Value’s omni-channel goal to create an integrated brand experience.
To learn about the co-op’s ship-to-consumer program, Hardware Retailing spoke with True Value exec, Abhinav Shukla, chief operating officer of True Value Company. In the Q&A below, Shukla shares the impact it will have on retailers, why the cooperative believes omnichannel efforts are important and more.
Hardware Retailing (HR): How long has the direct-to-consumer initiative been in the works?
Abhinav Shukla (AS): The omni-channel initiative has been part of our strategic plan all along. Consumers today need more flexibility. They are increasingly reliant on digital sources for inspiration, research and peer advice from their social networks. In short, consumers today expect to get what they want, how they want it and when they want it. True Value believes we can drive growth for retailers by embracing the omni-channel world.
When you think of ship-to-consumer, True Value has been focusing on it a lot during the past six-to-nine months. We have ramped up our IT, distribution and infrastructure efforts to find ways to support the retailers and their consumers faster, with even more options and with better customer service.
HR: Why do you think focusing on e-commerce is important? How do you think it will impact retailers?
AS: In retail, everything starts with the consumer. Today, they want more choices. In fact, about 60 percent of all retail transactions are researched online. In many retail segments, like apparel and toys, consumers are also transacting heavily online.
Brick and mortar retail hasn’t grown for the overall retail industry, but e-commerce sales have. In the hardware and home improvement industry, while consumers do research online for product features, price comparisons, closest retail location and more, today they are transacting online to a lesser extent.
However, online home improvement orders are increasing, and in the future it’s highly likely that consumers will both research and transact more heavily online. In the context of serving 4,400 retail locations, this can be a huge opportunity for us to help our retailers serve their consumers across both channels seamlessly. Our retailer footprint gives consumers more options – 4,400 locations to pick up an order or the ability to have it sent directly to their home.
We view direct-to-consumer not as an end itself, but a means to an end– a longer horizon omni-channel relevance vision, if you will. A number of initiatives underway for next year will help our retailers benefit from today’s trends, such as the trend towards consumers demanding multi-channel flexibility. In the future, these initiatives will help drive more footsteps into their stores and help drive transactions and sales. For example, one initiative underway will help retailers display their inventory online, allowing consumers to decide whether to visit the store and make a purchase.
HR: How can True Value retailers participate in this program?
AS: This program allows True Value retailers with a website to leverage the capabilities of e-commerce. Of the orders placed online, 80 percent choose the ship- to-store option. This is great because the retailer gets the sale, plus the customer stops in the store, potentially adding more dollars to the transaction during their visit. Members also benefit from being able to place ship-to-consumer orders on behalf of their customers when they’re out of an item or do not carry it.
HR: What is True Value Company doing to ensure two-day direct-ship capabilities to the consumer happen?
AS: True Value is building capabilities in its distribution network that will support same day pick, pack and ship and 2-day FedEx ground shipping to 90+ percent of customers from one of three retail distribution centers
We have already built these capabilities into our operations at one of the three distribution centers, with a late January time frame for all three centers to be operational. The new capabilities allow us to ship a limited number of hazardous items (e.g. lithium batteries, hazmat) and adopt best-in-class standardized packing operations. The standardization will result in the reduction in number of shipping boxes and hence shipping costs. Standardizing the pick, pack, ship processes across the centers will result in efficiencies, in addition to supporting capabilities that are on par with Amazon Prime baseline standards.
HR: Do you think Amazon and other online retailers have made it necessary for the hardware industry to make investments in e-commerce?
AS: Amazon has definitely set the standard on order-to-delivery time frames, shipping costs, efficient handling and the variety and depth of products available. In the context of variety and efficiency, we have been able to strike a delicate balance – a Holy Grail of sorts. We have innovated our way to lower costs, while improving e-commerce capabilities, but a lot more needs to be done in order to stay competitive. The competition from Amazon is driving retailers to make ever increasing investments behind their supply chain and fulfillment capabilities. Walmart and Home Depot are perfect examples. They are investing far more aggressively on e-commerce fulfillment capabilities than building out new brick and mortar stores. We view both channels as vital to our business and in support of each other, not in competition.
To a small extent, we’re better protected from the impacts of e-commerce. Our business is more levered to home repair than home improvement. If there is a leaky faucet and a local store, the flexibility and choice our brick and mortar store provides to the consumer is unmatched today by e-commerce. No question, ever-reducing order-to-delivery times pose a challenge though and we want to ensure our retailers are poised to survive and thrive with the right exposure to both channels.
