The Changing Landscape of Retail Supply Chains
While we may be finally finding a way out of the COVID pandemic that has gripped the world for the past 18 months, its impact on our lives will continue to be felt for many years to come. Not only in our routines and daily lives, but also in the way it has changed consumer behaviour and expectations. Looking at the bigger picture, the retail supply chain landscape has been changed in ways we would never have anticipated in early 2020, so adaptation to the new challenges that lie ahead is key.
There are some positives that have come about as a result of these changes, giving businesses an opportunity to take stock, review current processes and analyse how they can work more efficiently. A lot more has happened outside the control of the business arena, with national and global economies taking a heavy hit and consumer buying habits also adapting to the new world we are all living in.
Where things are heading remains uncertain, but regardless, retailers have little option but to look ahead to the future in anticipation and keep a close eye on what is currently an unpredictable environment, while remaining flexible and agile to respond to changing consumer habits. While COVID has had a huge impact on supply chains, a number of the trends and features that will be key for the coming months and years were in place before the pandemic. However, the crisis has accelerated their presence and brought forward what were already certainties.
Discovering the new norm
At the time of writing this article in July 2021, we are on the cusp of potentially a ‘return to normal’ although what this means in the long-term remains uncertain. The retail economy is seeing a lot of changes across the board and until we are in a more settled environment it is hard to know what the final outcome will be for many companies. While some are enjoying early successes, this may not be the case at a later stage, and as they may discover, the ‘new norm’ will likely not resemble the old. Conditions will be different and what worked before may no longer be relevant in another 6-12 months.
Over time retailers may see governments introducing subsidies to inject some life back into the high street, while the ecommerce sector may have to face up to new pressures that disincentive the adoption of new business models and technologies. On the other hand, as competition law continues to be loosened to enable food retailers to share workforces and physical assets, it could encourage supply chain collaboration that is beneficial economically, support the environmental drive, all the while working to the advantage of consumers.
Ultimately, the supply chain responds to the behavioural patterns of consumers and some of the trends that were present before the pandemic have been amplified further. Armed with so much choice and information today, and a broader awareness of the world around them, it’s important to be aware of the ‘conscious consumer’ and the impact they have on retail.
The effects of the pandemic will influence decision making further, affecting where consumers spend their money and the way they shop. Retail supply and fulfilment operations have to respond to the social, economic and environmental issues that serve as the driving force for these type of consumer requirements. Existing issues such as climate change, pollution and plastic packaging are becoming more prevalent, while ethical concerns on issues such as animal welfare, human rights abuses and modern slavery are garnering increased attention.
Evolving supply chain needs
Change is on the way across the supply chain, but its shape and form remains unclear. Responsive, agile and flexible networks will be key, with an ability to respond quickly to the changing needs of consumers as we navigate our way out of the pandemic era. The important thing is not to be afraid of change or to avoid it, as it is inevitable, and the sooner it is embraced, the better chance you have of building a strong foundation for the future.
One of the key areas to focus on is online. Ecommerce is no longer a ‘nice to have’ part of your business. It is an essential cog that needs to be given the funding and resources required to support sustained growth in this area. That extends beyond creating a functional website, but also one that can enhance the customer experience and accept and process orders seamlessly. Larger multi-channel retailers will have to overcome the challenge of estimating the level of online demand for the foreseeable future, and being able to plan sustainable expansions where needed.
Physical infrastructure also has to be assessed both in terms of location and type, and how each unit is used. These are questions that have needed to be resolved for quite some time, even before the pandemic, as the growth of ecommerce impacted on retailer’s physical estate. However, the COVID situation has accelerated the need to come up with fast and firm solutions to these deliberations.
There will always be a need for physical stores, but in an increasingly digital world how does the retail sector find the right balance between the two? Online provides convenience but it cannot offer a customer the chance to physically interact with a product and receive assistance from staff in-store before making a purchase. Should all or just some redundant stores evolve into fulfilment centres, or operate as city hubs to consolidate deliveries? Can they be turned into advice centres and showrooms? And how do they fit into strategies created for click and collect, local delivery and returns?
What we need to remember is that the supply chain is more than the warehouses, products, systems and operational elements, ultimately it is the people involved at all levels that make it possible. Investment here will prove vital to the growth and evolution of the supply chain. Digitisation and automation will continue to expand in use across the sector, but innovation will first of all come from the people that drive it, creating new opportunities and exciting new developments that will help us successfully leave this period behind us.