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Meeting the online retail challenge

30 April 2013

Changing consumer habits and the trend to online retail is permanently transforming logistics, believes James Sharples, managing director of leading intralogistics automation provider, Swisslog.

Expanded product ranges, shorter life cycles and reduced order quantities are just a few of the challenges that retailers are already facing, reflected in the rise of more flexible, yet more intensive warehousing. 

"Not that long ago, customers mainly went to their local stores to buy products. Today an increasing number of people from all age groups are already shopping online; it fundamentally changes the role of the major retailer.” Says James.

As familiar High Street names continue to disappear, there is more urgency amongst established retailers to gear their businesses towards direct deliveries.

"The rush to accommodate online purchases into the supply chain may have changed the focus from a single channel to a multi-channel approach, but the future is fully integrated retailing from any source. The consumer trend towards more product choice, enhanced transparency, detailed product information, flexible use of sales channels, flexible deliveries and availability of services 24/7 will ultimately change the equipment and the way intralogistics works.” 

To achieve these goals, Swisslog believes retailers are implementing a new strategy, known also as omni-channel retailing. The main idea is a fully integrated and highly transparent supply chain, where all sales channels will be simultaneously usable and referring to one centralized source which holds detailed product information. This omni-channel approach brings the warehouse closer to the end user, reducing the number of standard palletised deliveries and making the economies and flexibility of automation equipment even more appealing.

Within the warehouse, Swisslog sees signs that traditional order-picking is struggling to keep up with the demand of greater volume and variety, prompting further moves towards, high performance "goods to person” stations. The result, believes James, will be a re-evaluation of traditional materials handling equipment.

"The impact for the retailer has been a slow eradication of the effectiveness of traditional picking models. Typical pick to store processes in most distribution centres need to be more flexible to suit the pick of individual, smaller order sizes. Reach truck, order picking and pallet truck manufacturers are likely to see a downturn in business.”

The expectation is that high throughputs and a large range of products to pick from increases the running costs of a more manual operation significantly and helps to justify a higher level of automation. Whilst the demand for pallet moving equipment is set to remain for receiving goods, their use within the storage, order picking and goods-out areas are far from certain. 

"The strategies are in place, the developments are happening, and the number of online users is increasing dramatically every month. Within the next few years we will see customer expectations and buying habits being changed for good.”

Swisslog provides a complete portfolio for intralogistics automation, ranging from the design of material handling systems, through warehouse construction, system implementation and integration, to comprehensive and dedicated customer support. The company has seen continued growth over recent years, as customers continue to invest in maximising warehouse efficiency, productivity and throughout.