Retail Supply Chain Challenges, Opportunities & Changes Come into View

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New research reports from Coresight Research/Blue Yonder and RetailWire/Manhattan Associates/Google Cloud highlight key retail supply chain issues and challenges facing retailers and vendors in 2021, including some lessons learned from a pandemic-impacted 2020.

One notable takeaway—soft goods consumers still like to shop in physical stores despite the ongoing escalation in ecommerce purchases. Coresight/Blue Yonder found that 45.2 percent of respondents prefer to purchase apparel and footwear in stores versus 18.4 percent for online only and 36.5 percent who said they liked shopping both channels. Additionally, the same report discovered that nearly 54 percent of consumers said they had not made any apparel or footwear purchases on their phones since COVID-19 emerged last winter.

While Direct-To-Consumer selling is projected to rise further this year, there are potential pitfalls for soft goods vendors as they continue to lower exposure in wholesale channels and dial up DTC. Rising returns due to inappropriate fit is one problem being experienced by New Balance as 50 percent of its FY20 topline was generated by digital commerce avenues.

Maximizing ecommerce capabilities is the top supply chain strategy (69%) of retailers today, followed by optimizing fulfillment to customers to improve margins (47%), scaling click-and-collect management at curbside and store (35%), improving agility to respond to fluctuations in customer demand (35%) and improving ability to leverage shopper behavior data (35%), according to the Retail Wire study.

Faced with extreme demand spikes for key products in 2020, retailers discovered “hidden weaknesses” in their supply chain systems, according to RetailWire, that they are aiming to resolve in 2021. Among them—lack of real-time inventory visibility, weakness in useful forecasting and an inability to scale new systems.

Five additional takeaways:

  • Partnering with home delivery services was cited as the most important emerging technology cited by retailers in the RetailWire survey, followed by computer vision for shelf stock monitoring and blockchain for accountability and/or transparency.
  • Retailers want to improve the resiliency of their supply chain by diversifying their sourcing mix through “newshoring.” The trend will provide new opportunities for U.S. manufacturing and employment in the apparel and footwear segment, according to Steve Lamar, President and CEO of the American Apparel and Footwear Association. An estimated 65 percent of retailers told Coresight/Blue Yonder that they are establishing or expanding domestic manufacturing due to the pandemic.
  • More mainstream on-demand manufacturing model will help retailers adjust inventories and improve supply chain efficiencies. Coresight expects U.S.-based and global manufacturers to eye alternative manufacturing models to lower inventory levels and improve efficiency.
  • A majority of retailers (64%) have begun migrating some key supply chain systems to the cloud to eliminate technology walls between sales channels, internal departments, external partners and databases, according to RetailWire.
  • Consumers are more aware of the sustainability and social impacts of retailers and brands. More than 65 percent of consumer respondents told Coresight/Blue Yonder that environmental sustainability issues were “somewhat” or “very” important to them when selecting where to buy footwear or apparel.
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