Creative thinking and agility will be key to helping the retail sector to adapt to the ‘new normal’, a report has said.
The report, by Bis Henderson Consulting, said retailers needed to show flexibility, agility and responsiveness in their recovery following the coronavirus outbreak, and the same traits should be reflected in their supply chains.
It said: “The retailers that survive and prosper will be those with supply, fulfilment and return networks that are flexible, agile and responsive – capable of adapting quickly to changing consumer lifestyles, thinking and demands.
“Critically, those highly responsive supply chains must be created with the sustainability of the business, and its future profitability, firmly in mind.”
Many retailers have been impacted financially by store shutdowns as part of lockdown measures implemented around the world to limit the spread of the virus.
Bis Henderson suggested the temporary loosening of competition laws to allow food retailers to share physical assets, workforces and demand data was a positive lesson on collaboration the sector could take away from the crisis.
“There are ways of encouraging supply chain collaboration that are economically beneficial, serve the Green agenda, and do not constitute a conspiracy to disadvantage the consumer,” the report said.
“There are many parts of the supply chain that do not really form the basis for competition between brands. As far as competition laws allow, collaboration, through for example the shared use of vehicles, warehousing and other assets, should be continued and refined. It may turn out that in some areas, such as urban last-mile delivery, collaboration may even become a necessity.”
Many retailers must deal with huge swathes of unsold or unseasonal stock that has piled high during the lockdown period. As a result, they must review their sourcing, stocking and inventory policies, the report said.
“How commercially viable is near-sourcing, multiple suppliers, just-in-time manufacturing and pull ordering? Many fast fashion retailers already operate these more agile, short lead time, responsive supply chain models. How can mainstream retailers implement similar principles, and do so profitably?”
Technology such as automation will also provide the sector with opportunities to “improve labour resilience, to grow more cost effectively, and to be able to react faster and more robustly to fluctuations”, such as spikes in demand or labour shortages, the report added.
“Automation is not just needed in the warehouse – much sourcing, procurement, supplier relations, transport and warehouse management, and the links between them, are ripe for automation,” it said.
“Well-deployed technology would free people to focus on the real value-adding decisions. Digitisation at some level will be essential to create transparency and visibility, giving retailers more control and a faster flow of decisions and processes.”
The report concluded: “The key will be agile planning and prioritisation, balancing cost and risk – particularly as we enter an uncertain period where many businesses will be purely focused on short-term recovery and survival. Importantly, not everything comes with a big price tag, but creative thinking, fleetness of foot and, to some degree, a leap of faith, will be required.”
Meanwhile, the British Retail Consortium’s chief executive Helen Dickinson told the BBC retailers must ensure they can operate safely otherwise "they shouldn't open".
UK prime minister Boris Johnson said the "phased reopening" of shops could begin in England on 1 June, but will only happen where social distancing rules can be followed.
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