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Creating a retail supply chain for all seasons

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For fashion retailers, it has been a difficult couple of months. The likes of M&S and Next have cited the recent mild weather as a huge factor in why large volumes of winter stock is still sitting on shelves rather than passing through the tills. This, in turn, is presenting them with a conundrum when it comes to developing a successful pricing and sales strategy. Clearly, markdowns are one option as fashion retailers look to clear space for their spring/summer ranges, but in a retail market that remains fragile, can their bottom lines afford to take the hit?

Some retailers such as SuperGroup are taking a longer-term view to avoiding knee-jerk markdowns; holding onto winter stock and placing bets on a cold spring. Another approach being adopted by some fashion retailers is to change their product mix and increase the number of non-seasonal products they sell, thereby providing them with more of a buffer in the event of any volatile sales patterns. Irrespective of the approach that retailers take, it is clear that retail fashion supply chains need to be far more agile and able to react to seasonal changes, otherwise they risk being out of sync with customers’ requirements.

Agile planning

Fashion retailers are known for planning months, if not years ahead, when it comes to their product ranges. Clearly the shorter the production cycle the more reactive you can be; but for those fashion retailers that pride themselves on quality and are seen as trendsetters, the key is ensuring that goods are in store on a certain date. This has meant adhering to a schedule that delivers the product on time, whether that takes 3, 6, 9 or 12 months. What has changed in recent years is the predictability of the weather and of customer requirements. Today, fashion retailers need to be more flexible and avoid a rigid mentality of launching a seasonal range at the same time each year. To manage this newly dynamic environment where weather and customer requirements have an impact, having an agile supply chain is essential.

In today’s retail environment, demand is king, and meeting it quickly and cost-effectively is critical to business success. Retailers need to have real-time, holistic data with which to make accurate forecasts and create plans. It’s all very well planning, but it is no good if retailers can’t then enact intelligent decisions throughout their business to meet demand quickly and profitably. To do this, it is critical for the individual parts of an organisation’s supply chain to work in sync; the distribution and fulfilment plans created should act as the glue to connect the various execution components, such as picking, warehouse management and transportation. Retailers need up-to-the-minute visibility into each part of the supply chain to reveal need-to-know issues. By exposing and linking each component, retailers will be more reactive and resilient when disruption such as unseasonable weather occurs. For instance, improved visibility into inventory gives fashion retailers the option of being able to re-distribute stock to other stores internationally, where the weather conditions may be more favourable for sales.

Online saviour?

Another tool to help with the fashion retailers’ weather woes is better use of their online channels. An effective multi-channel offer ensures the best chance of selling to customers at the best price through ‘anywhere, everywhere’ order fulfilment and location-based promotions, both locally and internationally. However, the challenge facing many fashion retailers is that their in-store and online operations continue to operate in silos, which makes it difficult for retailers to re-distribute stock easily between the respective channels.

Fashion retailers need to think hard about the configuration of their supply chain as it must operate seamlessly, allowing fulfilment to take place from any inventory location in the most efficient and cost-effective manner. This requires a holistic view of supply and demand and the tools to profitably source stock whether online orders are fulfilled from a store, supplier or distribution centre. Retail fashion is all about staying on trend. It is now up to clothing retailers to prepare themselves for the changes in customer and meteorological behaviour and have an agile supply chain capability for all seasons, come wind, rain or shine.

Jason Shorrock, Retail Strategy Director, JDA

Published on Tuesday 09 December by Guest Piece

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