Has COVID Made Retail Supply Chains Sick, Too?
If you asked 100 retail industry experts about the one area facing significant challenges right now, one phrase you’d hear over and over would be supply chain management. Supply chains thrive on predictability. Yet as COVID-19 has shown us (not to mention a certain large ship getting stuck in the Suez canal), the world we live is anything but predictable. When our economy can be held hostage by a virus or a container ship, we’re a long way away from business as usual. But what can be done about it? With so many moving parts around the globe, how can we find a way back to much-needed stability? More specifically, in a post-pandemic environment, how can major retail industry executives effectively mange out-of-stock (OOS) at the store level and supply chain management throughout the organization? How can they maintain a competitive advantage, and keep profit margins healthy?
The Old Ways of Retail Couponing are Gone
“Things were simpler back then.” That’s a phrase nobody says about the present day, whether it’s 2021, 1972, or 1899. The present moment always seems overwhelmingly complex. Yet for major retail, made managing OOS far more challenging than it ever was, or will be again.
In the brick and mortar days, you’d run an ad highlighting your latest sale. You’d mail out a circular with your coupons and free-standing inserts. Customers would clip their coupons, head out to the store, make their purchase and go home. Simple. Now, there’s online sales, digital coupons, email marketing campaigns, BORIS, curbside…the list goes on and on.
SPAR Chief Revenue Officer Gerry Marrone vividly describes the transformation. “The digital first and omnichannel retail landscape has forced both retailers and brands to rethink when and where to reach their shoppers. Add in all the other digital marketing options like hyper-local promotions, geotargeting and in-store beacons and the days of the old FSI are long gone.”
Today, buyers are more empowered. Online shopping offers more ways for customers to find what they want, 24/7. Which makes it absolutely crucial that you have the product your customers want, when they want it. Which unfortunately, is not so simple. Why? Lots of reasons.
Stuck in the Suez: Supply Chain Problems
Right now, the big reason is supply chain operations. There simply aren’t enough containers to go around. Even before the Suez ship got stuck, we’ve been in the midst of a truly epic container shortage. According to Bloomberg (cited here for those outside the paywall) the situation is truly dire. “Imports to the port of Long Beach, which have a 35% share of containers coming into the U.S., fell as much as 13% in the first two months of the first quarter.”
It even goes beyond containers. Lars Mikael Jensen, head of Global Ocean Network at A.P. Moller-Maersk, the world’s number one shipping company was recently quoted in the New York Times. “I’ve never seen anything like this. All the links in the supply chain are stretched. The ships, the trucks, the warehouses.”
It’s a problem affecting retailers of all sizes. Even global giants like Ikea are experiencing major customer service hiccups dealing with their supply chain.
One way for retailers to adapt to the supply chain operations crisis of 2021—and the rising costs of raw materials that go with it—is not exactly the most glamorous solution. But it’s already happening at just about every retailer near you.
The Rise of the Store Brands
Whether it’s Equate at Walmart, Kirkland at Costco, up&up at Target, or countless others, private labels (the products formerly known as store brands) have grown extremely popular with price-conscious consumers, not to mention the department stores that carry them. Even McKinsey says they are “having a moment.” This is due mainly to COVID, and the supply chain issues discussed above. But it appears to be a trend that has staying power.
Noted e-commerce blogger Danavir Sarria describes the built-in competitive advantage that makes private labels popular with major retail. “You don’t have to worry about customization. Neither do you have to worry about huge minimums. The manufacturer already has the materials and processes to make the product at scale with minimal additional costs. The only thing that’s going to be different between your product and someone else’s is your logo.”
But what if you’re a retailer without a large private label? What if you’re paying higher shipping costs, but global slowdowns mean you still can’t get the products your customers demand in stock? This is where OOS management software comes into play.
Fully Optimized: How Supply Chain Business Intelligence Can Help You
Though it’s not by any means a magic bullet designed to cure all retail problems, supply chain management and out-of-stock management business solutions can empower more informed business decisions. For example one industry solution provides a supply chain management tool that allows you to make more accurate forecasts blending shelf availability and sales trends. At the same time, a robust supply chain solution will help you monitor inventory on a longitudinal basis, so you can make seasonal predictions. Some even take the weather into account!
When it comes to inventory management, one of the industry’s most admired solutions is made by inFlow. It handles inventory, sales, purchasing, reports, integrations and more…with a full range of powerful features to help you get a handle on your inventory and orders.
Do you have any inventory or supply chain management tools you depend on? What are your thoughts for overcoming the current supply chain crisis? Let us know. We want to hear from you.