To thrive and survive, retailers need to be at the top of their game… - February 2020

In a period of increased uncertainty, with Brexit and poor exchange rates unsettling both customers and investors, it’s no surprise that retail has been heavily affected. It can be suggested that the industry currently sits in a state of flux, with challenges presented on all sides. It’s out with the old, historically lucrative and profitable channels, and in with new digital routes, offering differing financial levers and developing at a rapid pace to meet customer demand. An agile end to end supply chain is now more critical than ever in determining a retailer’s success and is essential to survive in the digital world.

Traditional retailers now face unprecedented disruption due to the reduction in footfall and the ongoing burden of store rents. With increased customer demands, price competition has never been greater, compounded by the expectation for high levels of service. Online, Amazon are a key example of being particularly strong in this area, and earning their customers’ trust and loyalty as a result. Their recent annual update revealed their marketplace is growing faster than the retail arm.

2019 presented significant challenges; Summer sales slowed due to high temperatures and Boxing Day sales slumped compared to previous years; a combination which has put retailers under intense pressure.

What can retailers do to keep sales on track?

To help combat these negative trends, retailers have introduced a range of new services including store stock check and click and collect. These not only provide customer convenience, but also offer a great opportunity to drive footfall and sell-on. By tailoring the business offer towards customers, bricks and mortar retailers help to drive an increase in loyalty in a channel which is still often the most profitable.

There has been a significant shift in strategy direction, with the supply chain strategy also representing the business strategy in some cases. Examples include AO in-home service offering, Ocado 1-hour time slots, Argos nationwide same day-delivery and Screwfix’s reserve and collection, available in store in 1 minute. These offers are proudly promoted even before the advertising of products for sale.

Many retailers achieve over 25% of online sales, with the supply chain team packing and delivering the product. Each year it becomes more difficult to keep the cost down with increases in online sales driving up the average costs. It comes as no surprise that a good product therefore needs a great supply chain to be successful.

At Crimson & Co, a global management consultancy specialising in Operations, we have the tools and expertise to support retailers through this transformation at every step of the supply chain. We can leverage our range of experience across the world to bring best practice solutions to our clients, whether they themselves are local or multinational.

These are examples of what we can offer:

  • Ability to objectively evaluate the end to end through our global benchmarking approach, scprime®
  • In-depth planning knowledge to get the product to the right location, with the right software solution to be available for the customer
  • Deep physical logistics expertise
  • Integrating new technology like RPA and analytics using specialist capabilities within our Group
  • Fitting the supply chain improvements into a transformation context, using our own Assess Design Embed® framework to ensure that any change is lower risk, faster, of greater benefit and sustainable

We understand our high streets are changing rapidly with the closure of major retail brands. Although the high street is suffering, by creating flexibility in the supply chain, and abandoning locations and markets which will not survive in the mid-term, retailers can adapt their offering to appeal to consumer demands. Smart, efficient strategies can lead to increased footfall in profitable geographies and a maximised margin online. Ultimately, this is what will lead retailers to success.

Bob Gill & Ben Wright, Crimson & Co

For more information contact us.

 

 

-Ben Wright & Bob Gill, Associate Partners, Crimson & Co UK

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