1) Optimise inbound and outbound
We’re seeing a growing trend of retailers prioritising a review of their warehousing and fulfilment. They are honing-in on these areas to find supply chain efficiencies that help offset rising costs and minimise margin dilution. ASC research last year found that just over a third (35%) of retailers were focusing on fulfilment, with this increasing to half (50%) this year. The focus on warehousing shifted from 50% in 2022 to 57% this year.
Optimisation of warehousing and fulfilment can deliver long-term savings and lay the foundations for eliminating errors and inefficiencies that can otherwise significantly impede performance during busy trading periods. We’ve partnered with several retailers keen to streamline how goods are arriving at their warehouses. In most cases, retailers are working with numerous different suppliers, who each work in in their own separate ways.
Standardisation of processes can optimise storage, handling, and distribution by reducing touchpoints, removing labelling and packaging inconsistencies, and reducing vehicle movements and mileage. Efficiencies such as these are a staple part of a well-run nominated carrier scheme. They can help create flexibility and capacity for more effectively coping with peak.
2) Interrogate the accuracy of supply chain data
Being able to accurately track stock is crucial to the success of inventory management. Transparency and visibility help inform strategies and decision making that maximise sales opportunities and the value of stock. This becomes even more pivotal during the fast-moving, competitive peak period, when spikes in demand will occur against a backdrop of aggressive promotions and discounting across the market.
Retailers are best placed testing and questioning the accuracy of their supply chain data on an ongoing basis, and at the very least, ahead of peak. Inaccurate data will mask problems in a supply chain, such as the exact details about inventory levels and location. This becomes even more problematic during spikes in demand, when the speed of order placements and processing accelerates.
Regular audits of supply chain data will pinpoint how accurate levels of transparency are, as well as any information gaps. Steps can then be taken to address errors, which may otherwise cause inaccurate availability issues and delays during peak.
3) Be decisive
The ongoing impacts of high living costs mean retailers are facing increasingly hard-to-predict sales. Consumer confidence is fluctuating amidst tough economic conditions, raising questions about how conservative or optimistic shoppers will be during peak. Will they be tempted to snap up Black Friday bargains? Will they throw caution to the wind and splash out at Christmas? Have hard-pressed shoppers being holding back so that they don’t have to compromise of festive spending?
Second-guessing such factors is driving a trend of retail diversification and innovation. Our research found retailers are expanding product lines, growing sales channels, investing in more promotions and discounts, and adding more payment options for consumers – all in attempt to win those increasingly hard-fought sales. These tactics will be reviewed once again, as retailers aim to connect with consumers during peak, and our advice is for companies to be definitive and make decisions sooner rather than later. Supply chain and stock inventory management strategies can then be adapted in plenty of time to embrace changes.
4) Create contingencies
According to GfK’s Consumer Confidence Index, levels of consumer confidence rose by five points in August, noting a quiet optimism among shoppers and, perhaps, some brighter prospects for retailers heading into autumn. This could pave the way for a healthy Black Friday and Christmas peak; however, retailers must still have contingency plans in place.
Consumers are continuing to make cut backs and adjusting budgets and spending habits accordingly. Utilising supply chain data, retailers should be creating different models and scenario planning, so that they know exactly when to adjust selling prices and promotions during the fast-moving peak. The ability to act quickly could prove the difference in staying ahead of competitors in what is likely to be a price-sensitive, value-driven peak.
5) Don’t forget, peak doesn’t finish before Christmas
Although the peak period typically focuses on the Black Friday and pre-Christmas selling period, it should also embrace the after-Christmas returns period – a secondary wave of sales opportunities, which retailers must be ready for.
An influx of returned items after the festivities is signal of unsatisfied sales. Consumers will still be looking to replace the items they’ve sent back, and retailers can capitalise on the re-shopping trend by making returns quick, easy, and cost-effective (preferably free for consumers) and by speedily processing refunds. In most cases, this approach can encourage a consumer to continue shopping with the retailer they’re returning an item to, rather than deciding to switch and shop elsewhere.
Retailers need to ensure they are approaching returns as a standalone channel. This will help data to flow through supply chains, ensuring customer expectations about returns status and refunds can be managed, while also supporting the efficient processing and re-sale of returned inventory.
For more information about preparing retail supply chains for peak, contact Advanced Supply Chain.
About the research. ASC and SAPIO Research surveyed 100 UK retailers in September 2022 and July 2023 about how they were adapting to the impacts of the cost of living crisis. Decision makers working for retailers employing at least 250 employees were invited to complete an online survey.
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