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The continued rise of digitalisation and globalisation of retail, together with increasing consumer demands around speed of delivery and ethics, is creating a more dynamic and competitive marketplace for UK retailers. Our research identifies the different forces shaping the retail supply chain and how the supply chain responds to customer requirements.
The scale of the impact retailers expect the referendum result to have on their supply chains gives a mixed picture. While specific concerns include currency depreciation and higher import costs, uncertainty remains the biggest challenge and effective risk management will be crucial in order to maintain profitability.
Consumers want to see more new items on the shelves. Over half of respondents think the high street doesn’t keep up with fashion trends fast enough. Shorter and smaller productions are encouraged to respond to faster fashion cycles. 87% of the retailers also believe these will speed up still further over the next five years.
The changing weather makes it even more difficult for retailers to keep the right products in store. Over 60% of consumers say that they are dissatisfied with the suitability of stock between seasons. Retailers agree on the need to be flexible as weather patterns become less reliable.
With online shopping stimulating cross-border purchasing, retailers’ supply chains become ever-more complex and globally inter-dependent. Prior to the EU referendum, Eastern Europe was viewed as one of the most popular sourcing destinations. However, post-referendum, sourcing plans show a clear shift away from Europe . Domestic sourcing activities are seen to increase in the light of depreciated sterling and higher import cost.
Global supply chains face a large array of diverse risks. A suitable financial framework needs to be in place when considering extending supply chains to a new destination. In addition to explicit risks, implicit exposure need to be carefully identified, quantified and managed.
With evolving online shopping, an increasingly wide range of delivery and collection options are being offered by retailers. The pace of change shows no sign of slowing.
Despite all these choices, consumers are generally not satisfied with the delivery service they receive. The biggest complaints are around lack of flexibility to change delivery times or options, reliability and price. Although delivery services were rated poorly, consumers were more favourable towards collection services, rating them highly on cost and politeness of staff.
Higher consumer satisfaction and lower operating cost make ‘click and collect’ an attractive way to overcome the fulfilment challenge.
When it comes to ethical issues in the supply chain, people-related factors such as child labour, working conditions and safety are the top concerns for both retailers and consumers.
Although 29% of survey respondents say they would avoid shopping with highly unethical retailers, two-thirds of consumers (61%) say that they tend to forget about the ethical treatment of workers when they’re buying products.
This influence behind the shopping decision is generally being recognised by retailers as well. However, nearly all of the retailers have taken some action on ethical concerns, suggesting that good corporate citizenship rather than commercial imperatives may be the key driver behind actions.
Terry Murphy, Director of National Distribution Centre Operations, John Lewis shares how their distribution centre operates smartly to cope with the changing customer demand. John Lewis has been investing in its supply chain to increase its capacity and capabilities to embrace the omni-channel spirit.
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