STORES

Apple Buys Into the Shelf-Fulfilling Prophecy

Other newsletters will call the end of the complimentary phone charger Apple’s biggest news. But in our neck of the woods, it’s the Bloomberg report that Apple will fulfill online orders for the latest iPhone (and other gadgets) from its stores.

The standard model: Retailers including Target and Walmart began testing ship-from-store fulfillment pre-pandemic. In recent months, brands from Sam’s Club to Kendra Scott gave store fulfillment a shot.  

• Some brands have even built dark stores for online orders (Whole Foods) or converted existing stores to permanent microwarehouses (Bed Bath & Beyond). 

The iOS update: Apple will fulfill online orders from some of its ~300 stores in the U.S. and Canada, so long as shoppers 1) live within 100 miles of a store and 2) live closer to a store than a distribution center. One-day delivery may be possible in some areas. 

Surprise and deliver 

Shipping routes hit potholes when retailers swap warehouses for stores. But retailers are still incentivized to pack boxes in the aisles—for reasons beyond boosting delivery speeds.  

• Apple told staff cutting delivery distances is more environmentally friendly.  
• Despite recent surges in curbside pickup, most shoppers would rather commute to their welcome mats. 77% of U.S. shoppers want their purchases shipped directly to their homes, according to a September Accenture survey.

But the ship-from-store armada will have competing priorities when converting stores’ supply closets to fulfillment centers.

Their people: “Having a flexible, cross-trained workforce is critical to running a robust back of house operation while also ensuring that customers in the front of house receive a high level of customer service,” Rebekah Kondrat, founder of consultancy Kondrat Retail, told me.  

• Foot traffic timeframes should determine which tasks workers focus on, Kondrat said: Stores can flex teams to front of house ops during busy times, and leave order fulfillment for slower periods. 
• Store associates need to memorize their corporate-sanctioned greetings and master quick picking and packing. Those are different skill sets—and retailers shouldn’t shift workers from one to the other without adequate training.

Their inventory: As much as retailers want to take the Oprah approach to fulfillment, there’ll be days when online and in-store shoppers compete for the last AirPods Pro. The solution? Kondrat said, “Creating an inventory buffer for in-store customers [and] conducting regular cycle counts to ensure inventory accuracy will ensure customers aren't disappointed.”

PAYMENTS

Four Small Installments, IRL

Afterpay is going where few buy now, pay later (BNPL) providers and even fewer winning retailers have gone before: to the mall. 

The details: Afterpay users can now break up purchases in stores on cheap denim (Forever 21), classic denim (Levi's), and sturdy sneakers (Skechers), among other live and in-person launch partners. 

• Shoppers will use the Afterpay app at the register to pay the first installment, then handle the others over their next few paychecks. 
• Retailers don’t have to pay integration costs to partner with the platform.

Afterpay arrives in stores as BNPL players fight for online accounts and shoppers become even more budget conscious. The benefit for retailers? BNPL programs are known to increase cart sizes and loyalty.

The hiccup: Converting shoppers to BNPL in stores requires...shoppers. But brick and mortar traffic is expected to decline by double digits on major discount holidays this year, per ShopperTrak. 

My takeaway: Offering installments across channels is good for consistency, but shoppers are more likely to discover BNPL where they discovered the Home Depot skeleton (online).

SPONSORED BY ORACLE NETSUITE

Sure About Offshore Supply Chains?

The pandemic has changed life and business in just about every imaginable way. But one that was perhaps less expected is how it has exposed the lack of visibility many companies have around their offshore suppliers and manufacturers. 

This has resulted in a widespread call for more supply chain resilience and traceability. And in an even more striking shift, a move toward utilizing local supply chains.

WIth this change in mind, Oracle NetSuite has put together a white paper to discuss the importance of supply chain resiliency. Also inside:

• The benefits of local sourcing and production.
• Major costs associated with moving parts of your supply chain.
• Potential barriers to relocation.
• The steps to take if you decide to onshore.

If your supply chain is shifting toward local suppliers, you need to read this white paper from Oracle NetSuite.

GROCERY

CPGs Take Stock

This time last year, a wholesale grocery partnership could guarantee exposure for emerging CPG brands regardless of category. But with online delivery rising and grocers doubling down on private labels, could in-store discovery have an expiration date for some brands?

Shelf shakeout

In the latest installment of our Ask the Expert series, four CPG leaders shared their predictions for the future of grocery and wholesale partnerships as digital sales expand. They’re anticipating…

• Heritage CPG brands will follow Pepsi into direct sales.
• SEO and keyword purchasing will make or break online awareness.
• Brands that last in stores will belong to dominant categories.

Overall...“From my conversations with other brand owners, the effect has been category-dependent,” Sandro Roco, founder and CEO of sparkling water brand Sanzo, told Retail Brew. “Given the low margins in online grocery, I imagine there will be added pressure on category buyers to double down on winners and perhaps cut poor performers sooner.” 

You can read our panel’s full insights here.

WHAT ELSE IS BREWING

• Starbucks aims for 30% of its corporate workforce to identify as Black, Indigenous, or people of color by 2025.
• Asos more than quadrupled its profits via 1) cost cutting and 2) an athleisure surge.
• Bed Bath & Beyond is finalizing plans to sell Christmas Tree Shops.
• Arhaus is piloting a new store concept for personalized furniture.
• Madison Avenue retail properties are selling for the lowest prices in a decade.

COMMUNITY

Welcome to Coworking, our segment highlighting the best part of Retail Brew: you, the readers. Want to see your name here? Fill out our quick nomination form, or share it with a friend who reads Retail Brew. 

Give a warm Retail Brew welcome to Lauren Bogacz, Consumer Insights Manager at RXBAR. 

How would you describe your job on a date? I get to lead and/or be part of all the fun behind the scenes work that goes into how a brand shows up in front of consumers—including recommending and testing new products, and supporting campaign creation and brand health measurement.

One thing we can’t guess about your job from your LinkedIn: I get to taste a lot of cool product samples! Sometimes gives you a stomachache…

Favorite project you’ve worked on: Getting to know our "Super Consumers.” Most brands have them and don't know how to leverage them. 

One retail account everyone should follow: Trader Joe’s List. They give you something to look forward to when grocery shopping—needed in 2020.

SWAPPING SKUS

Even after removing the mask market from the equation, the pandemic and ensuing recession still had unexpected consequences for retail. 

• $300 coolers strike me as a capital-D discretionary purchase. So why is Yeti, maker of upscale picnic equipment, doing so well right now? (Marker)
• Retailers are struggling to fill seasonal roles despite a 7.9% unemployment rate. The situation is convincing some to raise their minimum wage. (WaPo)
• An ode to Spirit Halloween, which somehow opened 1,400+ stores this year. (NYT)

ICYMI

Catch up on the Retail Brew stories you may have missed.

• Outdoor Classes at Boutique Fitness Brands Need a Rain Check
• Can Dollar General Really Win an Affluent Customer?
• Ahead of a Holiday Returns Wave, Staples Launches Returns Program