CSCMP's Supply Chain Quarterly
October 17, 2018
Forward Thinking

Retail backroom: From storage closet to key supply chain node

With the growth of omnichannel retailing and pressure for faster deliveries, leading-edge retailers are reimagining the backroom as mini distribution centers.

For far too long in retail, the backroom has been viewed merely as a storage closet for the store floor. But with the rise of omnichannel retailing and the increasing pressure to shorten shipping times, retailers can no longer ignore that area, according to "Retail Backrooms: A Revolution in Roles and Business Value," a recent report by the consulting firm Tompkins Inc.

Retailers are coming to recognize that they can take advantage of their brick-and-mortar stores to fulfill the promise of same-day or next-day shipping (or pickup) for online orders. As a result, the backroom needs to transform into a "mini distribution center," where orders can be picked, packed, and shipped. In some cases, according to the Tompkins paper, retailers are even using the backrooms of their "superstores" to serve as a cross-docking point: Large deliveries are made to the back of a superstore and then are broken down and shipped out to smaller retail stores.

Such a change will require companies to think about their backrooms and store operations in completely different ways. Here are just a few of the Tompkins paper's suggestions for incorporating the backroom into an omnichannel strategy:

  • Make the backroom part of the company's supply chain operation. Now more than ever, the backroom needs to facilitate the efficient flow of products. It therefore does not make as much sense to manage the backroom as part of merchandizing or store operations, which primarily focus on sales.
  • Fulfill online, customer-direct orders from the backroom and not from the store floor. This will allow retailers to make the process of in-store picking and packing more efficient. In the backroom, they can create packing workstations that are dedicated to customer-direct orders. It may also be helpful to have separate inventory counts for the backroom and for the store floor.
  • Install material handling equipment in the backroom. Depending on the size and shape of the available space, retailers might find horizontal or vertical carousels, flow racks, conveyors, or mini-automated storage and retrieval systems helpful.
  • Use more regional parcel carriers for delivery to consumers from the store. According to Tompkins, regional parcel carriers are growing in number and generally offer lower prices than national ones.

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