The two extremes of retail and why stock visibility is more critical than ever
2020 is already an unprecedented year for the retail industry, and it’s likely to get harder before it gets easier. The rapid, global spread of the coronavirus COVID-19 has already brought many parts of the world to a standstill, confining consumers to their homes and disrupting business operations.
We have already seen the massive impact that COVID-19 is having on the retail supply chain; Chinese manufacturing is only just starting to come back online, according to CNBC, while ISM research shows that three quarters of US companies are feeling the strain of logistical challenges.
We don’t yet know the full extent of coronavirus’ impact for UK retailers, but already we’re seeing two extremes emerging. Brands that fall into the ‘non-essential’ category have had to close stores, while ‘essential’ businesses – particularly FMCG retailers – are struggling to keep pace with overwhelming public demand.
In both these scenarios, the supply chain is facing disruption, and retailers need to manage inventory available stock carefully in order to weather the COVID-19 storm.
Securing every sales opportunity in a supply chain crisis
The COVID-19 impact is destabilising retailers in two ways; it’s causing unpredictable changes in consumer buying behaviour, and it is also interrupting the manufacture, production and delivery of new stock according to usual scheduled deliveries.
We’re already seeing the perfect storm this is generating for the many FMCG brands that are currently struggling to keep pace with demand for virus-battling essentials such as sanitising hand gel and toilet rolls, and now self-isolation is leading to surges in demand for tertiary products such as DIY equipment, gardening products, cookware and children’s crafts.
Although retailers are beginning to adjust to the initial impact of this new world order, with Retail Week reporting that supermarket supply chains are easing, they are not out of the woods yet.
On the flip side, the critical challenge for other, non-essential sectors is survival despite reduced sales channels. With the closure of retail stores, business has shifted online in most cases. But with uncertainty over when the next batch of fresh stock will become available, or how deeply supply chain disruption will affect their short and medium-term operations, coupled with the ability to provide safe working environments, some retailers are choosing to close their fulfilment centres – Next is one of the biggest brand names to take this decision.
Correlating sales data with product availability
In order to minimise the impact of current and future supply chain disruption, complete visibility of stock is critical at this point in time. Retailers need to know exactly what they have available, in what volume, to manage sales until operations return to normal. But gaining an accurate, real-time overview of stock is difficult to achieve in a multi-channel organisation – unless companies are using sophisticated order management software to centralise operations.
In addition, retailers need insight into exact location of available stock across their business estate, and how this correlates with product sales data. There is little point having an abundance of one product in stores when bricks-and-mortar sales for that particular SKU are modest, but a limited supply available to meet online orders, which are much higher.
A returning issue
As if the supply of goods wasn’t worry enough for retailers, they are also faced with implications around returned items in the wake of the COVID-19 outbreak. Scientific research claims the virus can survive on surfaces for up to three days, so can easily be passed on by touch – what does this mean for processing returns?
Some retailers and fulfilment centres are already starting to adapt their protocol, leaving packages in the mail room for 72 hours before they are handled, and some even sanitise items before putting them back into the available stock pool. This considerably slows the reintegration of returned stock, adding further pressure to utilise unsold items in the smartest possible way.
However, multi-channel analytics software can give retailers up-to-the-minute business intelligence through which they can maximise sales in times of limited stock, bringing returned goods back into the available stock pool as soon as the quarantine criteria has been met and the item has been properly processed, and ensuring it is allocated to the most appropriate channel.
Opportunity in the face of adversity
The impact of coronavirus on the global economy is already significant, and the retail sector is being hit hard by isolation measures. But one silver lining of reducing public movement in a bid to slow the spread of COVID-19, however, is that bored consumers may shop more online during self-isolation periods.
When parts of China went into lockdown, cosmetics company, Ling Qingxuan, turned employees from stores that were closed down by the outbreak into online beauty advisors, communicating with customers virtually via channels like WeChat. This led to a 200% growth in year-on-year sales in the Wuhan area.
There is a separate argument over the morality of continuing to trade online at this time, and retailers have a duty of care to ensure workers are able to adhere to current health & safety and social distancing protocols, but for those who keep their ecommerce operation up and running, there is an unexpected sales opportunity in the face of retail adversity.
That being said, customers can only buy what’s there to sell, and the logistics associated with getting items packaged and sent out in times of supply chain disruption are not simple. Only retailers with the right supporting infrastructure will be fit to fight the impact of COVID-19 on business operations.
In an uncertain world, stock visibility is key
In truth we don’t know how long-lasting the impact will be on the retail community even after the pandemic subsides, but we do know the value of an efficient business operation at this difficult time. All we can do is manage the information available presently: both in terms of controlling the spread of the disease itself, and ensuring that retailers have the resources available to keep trading where possible, in a safe and ethical manner.
Getting a complete overview of what stock can be sold right now is critical to maximising sales opportunities in the wake of continued supply chain disruption and uncertainty. Retailers need the tools to reduce lost sales due to out-of-stocks in the short-term, and minimise the backlog of orders waiting for them when we return to business as usual in the longer-term – whenever that may be.
Sanderson is a leading provider of multi-channel retail software. Talk to us about how our technology can provide complete stock visibility, and help you leverage it across your business.