As we head into the holiday season, concerns around global supply chains are making headlines – ports are over congested, factories are closed and sales are expected to increase YoY.
Holiday sales are expected to increase between 7-9%, but with the disproportionate distribution of vaccines and lorry drivers limited, supply chain issues are rising. Ahead of the busiest shopping time of the year, we shed light on what retailers are doing to mitigate supply chain problems, including short-term and long-term strategies to consider.
The EDITED Retail Intelligence can help you detect ways to optimize other parts of your business during a time when your supply chains are impacted. Reach out to see a demo today.
Contributors to supply chain issues
Vaccine inequality
Vietnam is the second-largest supplier of apparel and footwear to the US, following China. However, the unequal distribution of vaccines globally and the Delta variant threat has forced Vietnam to close about one-third of the country’s factories, putting more than 3 million garment workers out of work. The American Apparel & Footwear Association has written to President Biden to donate more vaccines to the country in this dire time. On September 20th, Vietnam’s Ministry of Health also granted emergency approval of Cuba’s Abdala vaccine to help.
High shopping demand and early purchasing
Overall holiday sales are expected to increase between 7-9%, with e-commerce sales specifically projected to grow by 11-15% YoY, according to Deloitte’s annual holiday retail forecast. Shoppers will start purchasing ahead of schedule this year, already proven by consumer behaviors for Halloween as early release of Halloween decorations sold out at Home Depot back on August 17th. More brands have also been communicating holiday countdowns and collections earlier this year than the past two years in anticipation of the busy shopping season.
Image via Marisota Email UK – Sep 17, 2021
Limited HGV drivers in the UK
Many factors have contributed to the driver shortage in the UK. The pandemic has restricted travel and driver tests for Heavy Goods Vehicle (HGV) operators. While Brexit has forced many to move back to their home countries. Taxes have also increased for some working in the EU to be employed in the UK. Plus, online job ads for lorry drivers have spiked across Europe, with the demand already high in 2020. To mitigate the issues, retailers like John Lewis & Partners are raising wages for HGV drivers by up to £5,000 and Marks & Spencer is offering a sign-on bonus and generous pension.
Image via Road Haulage Association / BBC
Current company strategies
Investing in tech
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In the UK, The Co-op has partnered with Amazon Prime to provide same-day delivery. The number of robots used to deliver products is expected to expand from 200 to 500 by the end of 2021.
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In Australia, supermarket giants Coles and Woolworths are developing fully or semi-automated warehouses, where robots will retrieve items for human workers to speed up the picking process.
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Marks & Spencer committed more than £20mn to a technology fund to accelerate the shift to digital-first.
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The Very Group has invested in automated technology at its new fulfillment center, Skygate, to have orders ready for dispatch within 30 minutes.
Image via Adobe Stock
Investing in shipping
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To increase delivery speed, ASOS is on the hunt for a new warehouse in Europe, adding to its fulfillment centers in the UK, US and Germany.
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Walmart and Home Depot announced they were chartering private vessels to meet consumer expectations for full shelves.
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Urban Outfitters is switching from ocean freight to costly air cargo to avoid clogged ports and delays with many products coming from Vietnam.
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In late August, American Eagle bought AirTerra, a Seattle-based shipping and logistics company, which has cut its supply chain time down by a week and a half.
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E-commerce giant Amazon bought 11 Boeing 767 jets to deliver cargo across the US.
Image via Unsplash
Investing in brick and mortar
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With an estimated 8,700 stores closed in the UK during the first half of 2021, many retailers transformed physical stores into mini-fulfillment centers for online orders.
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John Lewis purchased a one million square foot distribution center from Tesco, creating 500 jobs.
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Amazon plans to add 517 facilities to its global distribution in the next few years, adding 176 million square feet its existing 402 million.
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DICK’S Sporting Goods announced it will hire the most seasonal associates in the company’s history for 2021’s holiday season – 10,000, up 1,000 more than in 2020.
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Target will open two new sortation centers in October and two more after the holiday season to support its ship from store capability.
Image via Unsplash
Quick wins
Prioritize product
Create “hero piece” edits of items you’re already stocked deeply into and focus on promoting basics, tried-and-tested bestsellers and more commercial trend items as they offer higher margins and have a lower risk of going out of stock. Prioritize these styles from suppliers over fashion-forward pieces that generally have a shorter selling window.
For new orders, update past-successful silhouettes with new fabrics or colorways to minimize the risk of new styles and fit issues. Other tips include utilizing any deadstock fabric at your disposal and trying to spread the risk – consider domestic or local suppliers if possible and cancel viral and of-the-moment trends if they are likely to arrive once their buzz has died down. This may also be the time to energize your gift card strategy for the festive season.
Image via Sisley Email UK – Sep 17, 2021
Reposition product
Think outside the box as to how you can reposition product at your disposal. It’s unlikely your customer has seen all you have to offer – how you promote items you’re currently retailing still has the potential to create excitement.
If you’re an EDITED user, read our Pre-Spring 2022 Trends For Now, where we outlined the upcoming trends from the runway that you should already have in your assortment. And for that late arriving product? Market holiday partywear as occasionwear-appropriate for all year round and reposition cold-weather products as ski season purchases into the new year. Also consider stock allocation. Are certain areas or regions more or less impacted? Should you move product from online to in-store availability or visa versa?
Image via TK Maxx Email UK – Sep 17, 2021
Reconsider your discounting strategy
Uncertainty and delays to supplies means that you’re less likely to want to clear stock than in the past. While consumers may have been conditioned to expect discounts, EDITED data from big discounting events, such as Black Friday, indicates a deeper discount does not always equal a higher rate of sell out. Consider “spend more, save more” promotions which result in less damage to margins, or for goods too seasonal to hold on to, promote within a smaller sales edit or category-specific promotion. Most importantly, is the product still trending? Don’t lesson profitability by deeply discounting still relevant stock.
Image via Oasis Email UK – Sep 21, 2021
Offer a seamless omnichannel experience
Gaining traction since the initial pandemic outbreak, GlobalData forecasts the click and collect strategy in the UK is forecasted to reach £9.6bn in 2022, accounting for 13.9% of online sales. With consumer behavior shifting towards this method of shopping, leverage the buy online pick up in store and curbside pick up approach to help mitigate shipping concerns. Don’t forget to utilize QR codes and mobile apps to bridge the gap between in store and online.
Image via Peacocks Email UK – Sep 14, 2021
Overcommunicate to customers
CEOs, founders and presidents of major retailers including Loft, Talbots and Lane Bryant have already written letters to customers, addressing supply chain issues and delivery delays. H&M and Boyish Jeans went one step further, allowing clients to track where their purchases are coming from and who is producing them. By being transparent with these concerns and thanking shoppers for their patience, retailers can make more personal connections and build brand loyalty with clientele.
Images via Pier 1 Email – Sep 26, 2021; Everlane Email US – Aug 19, 2021; Loft Email US – Sep 8, 2021
Images via Lane Bryant Email US – Sep 10, 2021; Boyish Jeans Email US – Aug 4, 2021; H&M Email UK – Sep 20, 2021
Long-term considerations
Leverage technology
By utilizing RFIDs, retailers can better track inventory and fulfillment. Take advantage of this technology to collect data on what customers are interested in and trying on to help inform orders and adjust production as needed.
Invest in customer service
Kustomer data cites 67% of shoppers expect retailers to know them and personalize how they interact. So, make meaningful connections via customer service agents. Give these agents the resources to provide timely and personal service like individualized and proactive outreach.
Offer pre-orders
Promote pre-orders as early as possible to manage inventory and production. Farfetch launched its pre-order service at the end of August to stay competitive in the market and reduce waste.
Images via Adobe Stock; Unsplash; Farfetch Email US – Aug 25, 2021
While the supply chain saga continues, ensure you have retail data like EDITED’s for the analysis you’ll need to react quickly to market changes, minimize any inefficiencies and capture other wins. With EDITED Retail Intelligence, your employees will breathe a little easier and your business as a whole will thank you too.
