Retail Consolidation: A Complete Guide

In our experience facilitating retail shipments at Buske for brands such as Starbucks and PepsiCo, shipping into retail without economies of scale can make it almost impossible to provide a competitive offering in retail stores.

Retail consolidation combines multiple brands on a Full Truckload (FTL) to the same destination, which eliminates the usage of Less-Than-Truckload (LTL). Why use a consolidated truck? LTL can be three times more expensive on a per-mile basis vs. shipping to a retail store on a full truckload. 

By consolidating shipments with other brands, companies can achieve real savings which can provide a viable way of shipping into retail.

How Does Retail Consolidation Work?

As explained by Science Direct in their Research in Transportation Business & Management journal, retail consolidation is simply the usage of shared resources such as a truckload in this example. 

Here’s how:

1. Pooling Shipments: Multiple brands with similar destination routes combine their shipments. This creates a full truckload, maximizing the truck's capacity and reducing the cost per unit of transported goods.

2. Shared Storage Facilities: Consolidation often involves shared warehousing solutions, where products from various brands are stored in a central facility. This not only optimizes space but also reduces each brands overall storage costs.

3. Efficient Distribution: Consolidated shipments are distributed efficiently to their respective destinations from the central warehouse. This process minimizes the number of trips and ensures that goods are delivered promptly.

Types of Retail Consolidation

Retail consolidation can be implemented in several ways, but they all work to optimize efficiency and reduce costs. Here are the common types of retail consolidation in logistics:

1. Shipment Consolidation: Retail order consolidation involves combining multiple small orders into a single larger shipment. This reduces the required trips and lowers transportation costs to move retail goods. Buske utilizes a dedicated approach to consolidated truckloads. Thanks to this technique, our small business partners enjoy reduced transportation costs.

2. Warehouse Consolidation: Products from different brands are stored in a shared warehouse. It optimizes space utilization and reduces storage costs leading to improved inventory management and faster order fulfillment

3. Distribution Center Consolidation: Centralized distribution centers receive, store, and dispatch products from multiple retailers. This approach streamlines the distribution process, reduces transportation costs, and enhances delivery efficiency.

Benefits of Retail Consolidation

Keeping up with retail consolidation trends is crucial for emerging brands looking to reduce costs and improve their supply chain efficiency. This logistics solution can positively impact supply chain management for any business.

1. Cost Savings: By filling trucks to capacity, brands share the cost of transportation, significantly lowering their shipping expenses. With Buske Logistics' shared warehousing solutions, storage costs are also reduced as the expenses are distributed among multiple brands. This shared use of resources helps our clients achieve substantial cost savings.

2. Improved Efficiency: Maximizing truckload capacity ensures fewer trips, resulting in the elimination of LTL. The other benefit is that a consolidator is typically well-versed in the compliance policies for many retailers, which offers an added benefit. Centralized storage and efficient distribution streamline logistics by reducing handling times and operational complexities.

3. Competitive Pricing: Consolidation cost savings can be passed on to customers. With reduced operational expenses on shipments and warehousing, retailers can offer competitive prices and attract more customers.

Key Strategies for Retail Consolidation

Effective retail consolidation strategies are essential to maximizing its benefits. Here are some elements to look for when implementing this logistics approach.

Utilizing Technology

Integrating cutting-edge technology in various aspects of supply chain management can make a huge difference in a company’s overall logistics operation. 

Warehouse management and transportation management systems can effectively streamline the entire logistical structure.

Warehouse management systems optimize inventory management, shipment tracking, and coordinating order fulfillment. With a transportation management system, it’s much easier to plan efficient routes and cost-effective shipping.

Third-Party Logistics (3PL) Providers

Partnering with competent 3PL providers allows brands to leverage their expertise, infrastructure, and technology, enhancing logistics capabilities and efficiency. 

On top of savings from shared logistical resources, companies don’t have to make huge, permanent investments, further ensuring reduced costs for retailers. 

In Buske’s experience, retail consolidation solutions have provided up to 21% savings by avoiding less-than-truckload (LTL) shipments.

With the right partner, retail consolidation services can go beyond pooling resources for shipping and warehousing. Buske’s clients can benefit from our advanced supply and demand forecasting, seamless EDI integration, and chargeback management solutions.

Optimizing Transportation Routes

Advanced routing software helps brands plan the most efficient routes, reducing travel time, fuel consumption, and costs. 

Transport consolidation has been a critical concern in logistics. A transport consolidation model in the Journal of Business Economics suggested that this approach may result in millions of transportation cost savings in the dry grocery sector alone.

Retail Consolidation FAQs

What does retail consolidation mean in logistics?

Retail consolidation in logistics is when shipments from multiple suppliers are combined at a 3PL warehouse before being delivered to retailers. This reduces freight costs, simplifies scheduling, and ensures compliance with retailer requirements.

How does retail consolidation reduce costs?

By combining multiple smaller shipments into one truckload, retail consolidation lowers transportation expenses, reduces fuel usage, and helps businesses avoid costly retailer penalties for non-compliance.

Why should businesses use a 3PL for retail consolidation?

A 3PL like Buske Logistics provides the infrastructure and expertise to manage inbound shipments, consolidate products, and ensure on-time, compliant deliveries to retailers. This improves supply chain visibility and efficiency.

What retailers benefit the most from retail consolidation?

Big-box retailers, eCommerce giants, and grocery chains benefit the most because they require consistent, efficient deliveries. Retail consolidation helps suppliers meet strict delivery windows and compliance standards.

How does retail consolidation improve supply chain efficiency?

Retail consolidation streamlines operations by reducing the number of shipments, improving truckload utilization, and minimizing delays. This creates a faster, more reliable, and cost-effective supply chain.

Overcome Costly Logistical Challenges

Innovative strategies and technologies within retail consolidation models are vital for success, especially for smaller brands. This solution allows businesses to optimize their operations, reduce costs, and provide better customer service.

Contact Buske for more information on optimizing logistics with retail consolidation solutions!