Protean Supply Chains: Ten Dynamics of Supply and Demand Alignment

CHAPTER 6The Omnichannel Challenge

Online sales continue to grow, posing a challenge for traditional retailers. In a report released in March 2013, Forrester Research stated that e-commerce generated $231 billion in 2012, accounting for 8% of overall U.S. retail sales. The research firm said e-commerce should reach $370 billion by 2017 as more consumers shop for goods with their mobile devices.

Another firm, Frost & Sullivan, has predicted that global online retail sales will reach $4.30 trillion by 2025. In its study, “Global Mega Trends and Their Impact on Urban Logistics,” Frost & Sullivan said, by 2025, nearly 20% of retail purchases will result from online channels. Indeed in leading markets such as the United States and the United Kingdom, the firm said nearly 25% of retail sales will come from online orders.

The rise of online retailing is coming at a time when retailers confront a lackluster economy and changing demographics. As the population ages in Western countries such as the United States, retailers can expect elders living on fixed incomes to have fewer discretionary dollars and to be more predisposed toward spending those dollars on health services than luxury goods. While online sales may be growing, traditional store sales are likely to stay flat at best. That same situation that exists in the United States exists on the other side of the Atlantic, in Great Britain. In an October 2013 presentation, “Omnichannel Fulfillment … Key Strategies and Tactics,” Stuart ...