Retailers can’t just rely on sophisticated customer-facing mobile apps and websites to be successful, but need to invest heavily in back-end support too.
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Speaking at the National Retail Federation (NRF) in New York City this week, chief information officer of John Lewis, Paul Coby, said that, to succeed in omnichannel retailing, brands must have really good front-end technology – but it is useless unless the back-end fulfillment technology is re-engineered to cope with peaks in consumer demand.
“You can’t do one without the other,” Coby said.
“Having a pretty and award winning front-end online and mobile is really important to have, but they’re useless unless you’ve sorted the back-end technology, because customers expect fulfillment to be accurate and on time,” said Coby. “Unless you have invested in the distribution and industry systems, you can’t deliver that promise.”
Coby’s advice to retailers comes a couple of weeks after many failed to meet customer expectations, as almost a third of British online shoppers experienced problems with their orders over the 2014 Christmas period.
Days before Christmas, Sainsbury’s and Waitrose suffered from IT glitches, resulting in the cancellation of some customers' Christmas food deliveries. Earlier in December, Asda, Marks and Spencer and delivery firm Yodel had all been unprepared for the surge in sales.
Distribution investment saves John Lewis
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Meanwhile, Coby said the only way John Lewis got through the period unscathed was by investing heavily in its distribution centres.
“The nature of how peak is changing is because of Black Friday – it produced a super peak, and really it was a logistics and technology Christmas,” Coby told the NRF delegates. “We only got through it because we invested heavily and continue to invest heavily in distribution centres.”
The retailer saw a significant increase in online shopping over the 2014 Christmas period, with 36% of all sales conducted on its website. John Lewis reported a 19% increase in the use of online channels compared with the previous year, with over half of online orders collected in-store via the click and collect option, rather than home delivery.
Total sales during the five weeks to 27 December 2014 rose by 4.8%, with the Black Friday discount weekend in November contributing £777m to the increase.
Meanwhile, sales in shops remained at a similar level to 2013, meaning online channels were largely responsible for boosting the sales figures for Christmas 2014.