Smart retail in times of change

Smart retail in times of change

As one of the most challenging aspects of retail the fashion sector is facing a significant crisis. Thomas O’Connor, senior director analyst with the Gartner Supply Chain practice, explains for The Logistics Point….

...many brands have more than doubled their storage capacity and what needs to be done to overcome it.

Additionally, some large and small fashion retailers are starting to enter into administration and bankruptcy.

‘There are a number of fashion retailers who have cancelled autumn orders as they try to push their inventory onto the market,’ O’Connor says.

This has put pressure on manufacturing as companies do not know what and when orders will be placed.

Companies are looking for ways to resolve their stock pilling troubles but it could lead to a potential brand degradation.

Some are considering giving away stock to large NGOs in markets outside Europe and the USA.

Key investing ‘Large organisations are investing in their key suppliers to ensure longevity,’ O’Connor continues.

Smaller to medium retailers will struggle the most as they try and restart production.

Demand in China has come back relatively quickly but there wasn’t an immediate bounce back. O’Connor says there was a V-curved, but not all the way. ‘We are not seeing businesses coming back to their sales’ forecasts for 2020,’ he continues. How big the recovery will be depends on the product category.

According to data from China, companies there have managed to recover at least to 80% of the trading levels they had before the virus.

Advantage will have those who can start manufacturing faster and more effectively. This will, for the most part, depend on the budget's abilities.

What reopening will look like is hard to tell. It is expected that the market could see some acquisitions and merging, as well as collapses.

Weak sales In Europe countries like Germany, who started to reopen in the end of April, have initially recorded weak sales.

see any significant recovery, as consumers are careful about costs and too much social interaction.

Chinese consumers needed at least four weeks to feel safe and start returning to some pre-Covid habits.

Because of that companies will have to rethink the way they integrate sales channels and existing inventory, that is piling up everywhere.

Garner’s expert expects to see less risks being taken in terms of new product introduction. . Ecommerce on ‘It comes as no surprise ecommerce will win out of this,’ O’Connor says.

Best practices

Low price retailers will get an additional boost. Latest insight from China show consumers are price conscious.

Similar impacts may be anticipated in Europe and the USA. Chineses businesses are coming up with recovery forecasts to try and plan step by step their way out of the crisis.

Using data from the markets first affected could be a tool to forecast how consumers will behave. Another important point is working with suppliers to make the best out of what is available. Smaller packs might be better at this moment. Be smart in the way you allocate jobs. Employees who are not needed on the shop 17 floor can deliver online orders, for example.

They look at how sales perform and basedon that decide how many employees to bringback to work.

Operations Part of the question is when operations will return to normal. Most importantly it is hard to say what the new normal will look like.

O’Connor says that while talks on nearshoring production are occurring, most firms are not moving manufacturing facilities out of existing locations. ✶

Thomas O'Connor

Thomas is a Senior Director, Analyst, in the Gartner Supply Chain Industries and Programs team, based in Sydney, Australia. He is Gartner's global lead analyst for retail demand-driven supply chain maturity, performance management and benchmarking initiatives (also supporting Consumer Products), working closely with supply chain executives to drive improved supply chain performance and organizational alignment.

The Logistics Point, Issue 5 - June 2020