Today’s “new retail” — a shopping experience that seamlessly blends digital and offline commerce — is still in its infancy. But it’s already defining the future of technology, business and operational strategies for companies worldwide.  

Millennials are now the largest demographic cohort of shoppers in the U.S. Currently, 80 million millennials spend $600bn a year. Spending will rise to $1.4tr annually by 2020 — a full 30 percent of all retail sales, according to Accenture. This surpasses the combined spending power of the baby boomers for the first time in history.

What does the spending power of millennials mean for retailers? It means that their target market is shifting to those who have grown up with technology at their fingertips. They use (perhaps take for granted) the technology-powered conveniences all around them, including ATMs and mobile phones. They have also embraced an entirely new level of personal convenience and immediacy with services such as Lyft, Doordash, and PrimeNow. 

This combination of technical savvy and convenience-seeking consumers is driving new demands of the retail shopping experience. They demand a new e-commerce journey. 

Unheard of just five years ago, capabilities such as click-and-collect and same-day delivery are now table stakes for most retailers. In fact, by 2025, 10 percent of all sales will be fulfilled by click-and-collect, while in-store purchases will decline to 60 percent. 

For millennials, it’s not just about your store’s brand, product and price. It’s also about the speed, cost and convenience of delivery. Amazon has proven it with their wildly successful Prime service. 

The Outbound Supply Chain

It used to be the case when business leaders talked about the supply chain, they meant the inbound supply chain, which manages the supply and creation of products to sell. Today, it is the outbound supply chain, i.e., how do companies of all types deliver sold products — whether they are manufactured already or not — into the hands of the customer as fast, conveniently, and cost-effectively as possible, leveraging all assets they have available, including stores, warehouses, manufacturers, and last-mile delivery providers. 

The level of convenience consumers now demand in the shopping experience is powered by this blended outbound supply chain. However, most companies are struggling to provide basic conveniences. Why? Because the evolution of retail has outpaced the technology infrastructure on which retail is built. 

For example, if a retailer shows the inventory available today in the closest store, there’s a number of technical and physical hurdles they have to overcome. Many retailers have inventory data spread across multiple stores and fulfillment centers making it difficult to get a clear picture of which products are available where. Distributed Order Management (DOM) systems attempt to bridge the gap with the ability to provide a detailed view of inventory availability but fail to support hundreds of thousands of concurrent shoppers requiring single-digit response times. Local point of sale (POS) systems and warehouse management systems (WMS) control the inventory position at each store and fulfillment location. 

These systems are primarily based on “on-hand” inventory updated manually and lack the ability to provide a realistic view of product availability across the various selling channels. For these reasons and more, many retailers are prevented from providing the true fulfillment experience consumer shoppers now demand — fast, convenient, accurate and reliable delivery options at their fingertips.

So, how do you prepare your outbound supply chain for the demands of today’s customers? In many ways, the level of digital personalization that is available to retailers across other steps of the e-commerce journey, including personalized search results and advertisements, should also be applied to the outbound supply chain. 

First, start with the data. Information such as customer location, customer preferences, delivery options, cost to serve, and, most importantly, a single source of truth for product availability are required. All of this data needs to be available for analysis by intelligent systems in real time so retailers can optimize fulfillment scenarios in milliseconds in order to power the customer experience. 

New advances in technology approaches such as headless commerce architectures are replacing traditionally siloed and monolithic technologies and platforms. At its highest level, headless commerce involves the creation of functional microservices where application programming interfaces (APIs) provide the necessary functional intelligence across the customer journey, but with the intelligence, depth and scale required to support the new retail experience. While this approach can be complex, it provides the flexibility to incrementally add e-commerce feature enhancements that can be difficult, if not impossible, with traditional architectures. A majority of retailers are either in the middle of a full-scale re-architecture using this approach or are looking at specific areas of their e-commerce journey to upgrade. 

The Future for Commerce 

To satisfy the demands of the new consumer, upgrading the traditional outbound supply chain technology stacks with a headless commerce approach is a business imperative. Answering consumer questions such as “When can I receive my order?”, “How can I receive my order?”, and “How much does delivery cost?” as early as possible in the shopping journey will convert more sales and make “new retail” your new reality. 

If you can answer these questions sufficiently, millions of millennial shoppers will be clicking your buy button instead of your competitor’s. 

Eugene Amigud is founder and managing partner at Yantriks.