The retail industry was in flux well before Covid-19 attacked all business activity. The retail apocalypse started tapering off by early 2019 with a new normal established. For the survivors omni-channel retail, the endless aisle, fast fulfillment / high availability of SKUs, immersive experiences in stores and better personalization were some of the key trends they needed to adapt to. From an operational standpoint it had become essential to collapse the walls between different functions within the company and among retailer and suppliers. A whole new level of agility powered by the mountains of data, that all retailers have at their disposal was the order of the day.
Then Covid-19 struck and today the biggest challenge retailers face is working capital shortages. For many retailers an entire season has been decimated. The future remains unpredictable. Even after many orders were canceled or differed, retailers have a pile of inventory, as predictive algorithms have become useless. Meanwhile consumers have moved on to a new season and a different set of priorities. This poses a problem because not having what customers want will hurt sales, simply not affordable, but with working capital tied up and mark-downs increasing, buyers no longer have any margin for error.
The solution? The same as it was before. Agility remains the order of the day. There are two key things retailers can do to become more agile in 2 weeks flat.
- Automate Response to Sales Trends
When sales deviate from you plan how many reviews, reports, emails and meetings does it take to assess the impact? How many emails does it take to execute your response? Are the response timelines tracked? What you need is a Control Tower that routes any potential issues to the right person, translates your organizational knowledge into a structured response, tracks your response and escalates bottlenecks intelligently.
- Supplier Integration
Volatile demand and disrupted supply chains at the same time are the perfect storm. Now, more than ever, retailers need visibility into timelines and suppliers need visibility into demand. Structured supplier collaboration is essential.
Retailers that are able to do these two things free up working capital in two key ways:
- Omni-channel inventory utilization, lowering total inventory requirements
- Buying in smaller batches that enables quicker turnover and higher seasonal relevance
Over the next few weeks we’ll be going into more detail on easy, practical ways to address these challenges and the nuances for different segments within retail.