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Retail

Big-Box Retailers Turn to Transloading Near Major Seaports

Big-box retailers looking to keep a lid on inventory and related costs will increasingly turn to transloading near major seaports. That’s the message from Robert Leachman, a professor of industrial engineering and operations research who analyzes supply chain logistics.

In a presentation to the California Leadership Symposium in Sacramento, Leachman said the transloading of Asian imports from 40-foot marine containers to 53-foot domestic containers in Southern California, and at other major gateways, already is increasing.

The University of California-Berkeley professor, known in the maritime industry for two “elasticity” studies he performed over the past decade on the relationship between port fees and cargo diversion from Los Angeles-Long Beach, said large importers and national retailers utilize three types of logistics strategies when it comes to importing consumer merchandise from Asia.

The “push” strategy is normally applied to low-value merchandise to reduce transportation costs. Importers make their allocation decisions when the product is still in Asia. They ship the containers intact through a U.S. seaport and on to an inland distribution center before they decide the final destination.

Importers utilize a “push-pull” strategy when their goal is to reduce inventory-carrying costs. Consumer merchandise is imported through a major gateway and trucked to a nearby distribution center where it sits until the retailer determines where in its national network the merchandise will end up. The merchandise is often transloaded into domestic containers for the inland move.

Transloading comes at a cost, and transportation costs in the push-pull strategy are usually higher than in the push scenario. Retailers using the push-pull strategy, however, are better able to manage their inventory and reduce inventory-carrying costs by utilizing this strategy. Leachman calls this the power of postponement.

Los Angeles-Long Beach handles about 40 percent of all U.S. imports from Asia, and retailers using the Southern California gateway utilize one or both strategies. Many national retailers also use a four-corners strategy in which they spread their shipments out over the four major gateways for the Asia-U.S. trade: the Pacific Northwest, Los Angeles-Long Beach, the Southeast and New York-New Jersey.

With low wages in China and other Asian countries and near-record-low interest rates in the U.S., consumer goods imported from Asia have broken down into three categories by value: 25 percent low cost, 50 percent medium cost and 25 percent high-value merchandise.

With wages in Asia rising, however, currencies are being revalued and interest rates are bound to increase eventually, Leachman said. He ran a model in which total supply chain costs increased 15 percent, and in that model the low-cost merchandise dropped to 15 percent of total imports from Asia, mid-value merchandise remained at 50 percent and high-cost merchandise increased to 35 percent of imports.

As that scenario develops, retailers will move toward more push-pull shipments in order to reduce inventory costs, and that will result in an increase in transloading near major seaports, Leachman said.

Source: The Journal of Commerce

Consumers Want What They Want and Don’t Mind Sharing Personal Data with Retailers, Survey Finds

A new IBM survey of more than 28,000 consumers found that, overwhelmingly, consumers are looking for a more personalized shopping experience and are willing to share select details about themselves with their favorite retailers, in order to educate brands on exactly how, when and where to approach them. Just as we chat with our local shopkeeper, consumers are willing to dish to retailers about their media usage (75 percent); demographics (73 percent); identification, such as name and address (61 percent); lifestyle (59 percent); and location (56 percent) for a more targeted and smarter shopping experience.

Consumers are telling IBM that they actually want to receive more communication – not less – but they want it to be delivered through preferred media channels and in a relevant way.

Increasingly, savvy retailers are responding to this need and using sophisticated technology to make sure every interaction with customers is spot-on, based on individual preferences, location and lifestyle. IBM’s ongoing research shows that retailers must provide clear compelling reasons to shop; deliver personalized offerings and reach shoppers when and where they prefer, in order to win over their wallet share. According to the research above, consumers are more than willing to give retailers the data to make this experience possible.

At the same time, the rapid influx of digital data is posing new challenges for retailers. Customers are sharing their experiences widely online, giving them more control and influence over brands. A recent IBM CMO study of more than 1,700 chief marketing officers from 64 countries and 19 industries revealed that the majority of the world’s top marketing executives recognize a critical and permanent shift occurring in the way they engage with their customers, but question whether their marketing organizations are prepared to manage the change. This shift requires new marketing approaches, tools and skills to effectively reach customers.

“The speed of technology innovation, consumer adoption and access to information has created an environment where everything is known and the consumer is truly the one in power, coalescing around shopping communities of ‘we,’” said Jill Puleri, Global Retail Leader, IBM Global Business Services. “Retailers can win over this empowered consumer based on re-establishing a trusted relationship and building loyalty through improving the store environment, product assortment and store communications.”

Source: IBM

US Retail Growth Will Be Slower This Year, Outpace Overall Economic Growth, NRF Says

Retail sales will slow to 3.4 percent this year but will outpace consensus expectations for overall economic growth, according to a new National Retail Federation forecast. The increase will come despite stubbornly high unemployment and continued uncertainty over the prospects for job growth, NRF President and CEO Matthew Shay said at the federation’s annual conference in New York.

The retail federation expects retail industry sales excluding autos, gasoline and restaurants to rise 3.4 percent to $2.53 trillion, compared with growth of 4.7 percent in 2011. Most economists expect GDP to rise 2.1 to 2.4 percent.

Shay said retailers’ holiday sales rose 4.1 percent from 2010 but this year’s outlook is clouded by high unemployment, slow income growth, commodity inflation, a shaky housing market. He said consumers are starting to spend more but that consumer confidence remains fragile.

The Global Port Tracker published by the NRF and Hackett Associates this month forecast that container import volume through 10 major U.S. container ports should be flat in January before rising this spring.

Journal of Commerce Mario O. Moreno forecasts U.S. containerized imports through all U.S. ports will rise 1.3 percent in the first quarter and 2.8 percent for the year.

Source: The Journal of Commerce