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Study: Omnichannel fulfillment squeezes profits

BY Michael Johnsen

 

SCOTTSDALE, Ariz. — Only 16% of companies fulfilling omnichannel demand are doing so profitably, according to a new survey from PricewaterhouseCoopers released Tuesday.
 
According to the survey, the high cost of fulfilling orders is eroding retailers’ margins as they sell and deliver products across multiple channels. A full 67% of respondents reported that these costs are growing as they increase their focus on selling across channels. 
 

These findings are highlighted in "The Omni-Channel Fulfillment Imperative," a new report prepared for JDA Software Group by PwC. This study is based on a global survey of more than 400 retail and consumer goods CEOs from around the world, conducted in late 2014.

Survey respondents reported their highest costs associated with omnichannel selling as:
 
  • Handling returns from online and store orders (cited by 71% of respondents);
  • Shipping directly to the customer (67%); and
  • Shipping to the store for customer pick-up (59%). 
The CEOs in the JDA study recognize that they need to continue investing in business improvements to enhance their omnichannel performance. However, reducing the associated logistics costs is not their primary focus. When asked to rank their top initiatives for improving business operations, CEOs’ number-one choice (57%) was spending capital on creating new customer experiences. Similarly, when asked to rank strategic growth enablers for the year, reducing/reformatting physical store footprints to focus on expanding the ecommerce business was the top choice at 53%. 
 
“Every time retailers receive an online order, they have a number of options to fulfill that demand. They can pull the product from a local store, send it from a centralized warehouse or ship it directly from the supplier. JDA’s new study demonstrates that most retailers lack the insight to make these decisions in a profitable manner — and are not sufficiently focused on this critical capability gap,” said Kevin Iaquinto, chief marketing officer at JDA. “They need intelligent logistics and fulfillment solutions that can reveal the hidden costs, and the customer service trade-offs, associated with every delivery option. In addition, to truly win in the omnichannel marketplace, retailers need the upfront demand forecasting tools to make sure products are already distributed across all locations in a manner that supports profitable delivery.”
 
Howeer, as many as 71% of respondents said omnichannel fulfillment is either a high or a top priority. And these CEOs are planning to invest an average of 29% of their total capital expenditures for 2015 on improving their omnichannel fulfillment performance.
 
The fulfillment capability most cited as needing attention was transportation and logistics, named by 88% of CEOs as a priority for the future. The second capability CEOs will focus on is improving inventory availability to fill orders, cited by 85%. 
 
“Having products available, then finding the most profitable way to deliver them are critical activities that lie at the heart of supply chain excellence,” noted Iaquinto. “The CEOs in the JDA survey clearly understand the challenges they have ahead of them with regard to fulfillment, and they know they will have to innovate if they are to be profitable while meeting customer expectations across channels. The good news is that advanced technology can help retailers and consumer goods manufacturers master omni-channel fulfillment. However, until companies fully leverage these solutions, they will fail to realize positive financial returns on their omnichannel investments.”

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Cutex develops new Cutex SPA Formula for stubborn nail color

BY Antoinette Alexander

ST. LOUIS — Cutex, a producer of nail-care products, is thinking outside of the jar with the launch of its new Cutex Twister with SPA Formula one-stop polish remover jar.

"Consumers love how effective Cutex SPA Formula is when it comes to removing stubborn nail color," said John Mandelker, president of Cutex Brands. "Developing Twister was a natural fit. It's the perfect solution for those frustrated with the mess and hassle of using multiple cotton balls to remove dark or glitter nail polish. With Twister all of the tools are in one place, truly making it the fastest path to healthier nails."

The new design includes a bristle brush imbedded in the sponge, allowing users to both soak and scrub their nails. Not that much scrubbing is necessary; the sponge is soaked in Cutex SPA Formula, which is specifically engineered by Cutex chemists to clear hard-to-remove polish quickly and effectively, the company stated.

"The new brush in Twister is like a team of little fingers gently scrubbing away at that stuck-on polish," added Barbara Hershfelt, director of sales and marketing for Cutex Brands.
 

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Coty names EVP, category development

BY Antoinette Alexander

 

NEW YORK — Coty has appointed former Reckitt Benckiser executive Camillo Pane to serve as EVP, category development, effective July.

Pane will join the executive committee and report to Bart Becht, chairman and interim CEO. Pane succeeds Renato Semerari, who will remain in his role for the transition period.

Pane’s responsibilities will include the development of strategies, innovations and support programs for Coty’s categories and brands across all its businesses of fragrances, color cosmetics, skin care and body care.

Pane was most recently SVP, global category officer consumer health at Reckitt Benckiser. In that role, he was responsible for managing one of the largest and fastest growing categories at Reckitt Benckiser. He started with Kraft and was with Reckitt Benckiser for 19 years in local marketing, general management and global category development roles across a very broad variety of categories and brands in Italy, the United States, Brazil and the United Kingdom.

“Camillo is one of the most respected leaders in the consumer goods industry and I am very pleased that he will be joining the Coty team,” Becht said. “Coty will continue with its strategy of investment and revenue growth on its power brands while returning to profitable growth behind its efficiency programs. This makes the category and brand development mission critical and Camillo’s extensive experience in this area will make Coty more competitive and help the company execute its strategy.”

 

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