We are currently experiencing a transition and evolution of the supply chain with consumer demand increasing, while the drive towards efficiency and agility is becoming more prominent than ever.
A recent report by the Capgemini Research Institute outlines how supply chains have struggled to cope with the fallout. With 68% of respondents taking more than three months to restore operations while only a tiny minority are taking all the necessary actions to be crisis resilient.
1. A supply chain more agile than ever:
Over the past year, organisations have struggled to respond quickly to increasing disruption and to restore their operations to a steady, reliable state. Retailers were forced to implement and invest in the technology needed to best meet customer needs and to adapt to the changing business landscape. Looking towards the new year, we anticipate that the investment and adoption of digital technologies set to strengthen retailer’s online capacities will continue to accelerate.
In 2021, we expect to see this online capability continue to grow at pace – with retailers focusing their investments on becoming agile while driving investment into functions like demand planning, order management, data management and analytics. These initial investments will set the stage and allow retailers to begin implementing technologies such as robots to augment human efforts or even digital store applications such as virtual screens and display screens to start hitting the high street.
With hygiene likely to continue to be in front of mind for many consumers – touchless deliveries and virtual trying on of clothing items will likely see pick up. There will also be a focus on efficiency, reducing costs, and how to become more sustainable, e.g. store closures, process improvement, eco-packaging, intelligent deliver grouping & Optimising COVID hygiene procedures.
We also expect the risk-averse retailers, who have not invested in technology yet or have been waiting to see the market performance, will invest into the latest technologies to be able to drive efficiency and agility in the supply chain. These retailers will invest in technologies that already exist rather than focusing on ‘new’ concepts as they want to be able to see the change quicker than before.
2. Acquisitions and consolidations
We have already seen the unfortunate closure of a few major retailers in 2020. With further uncertainty looming over us, smaller retailers, and brands, that do not have the financial capacity to keep their stores open and succeed may go into administration. If this happens, there will be a massive opportunity for the larger retailers, who are looking to diversify their brands and channels, acquiring some of these smaller retailers and brands which may be more ‘pure play’.
We are already witnessing this with brands wanting to acquire Arcadia without going into administration and trying to get its stock and assets. This trend may continue in 2021, and there could be a big opportunity for supermarkets looking to tie up with some of the smaller retailers that offer something different so, the larger stores can add to their range. One such example in the market can be the tie-up between Sainsbury’s and Argos that happened in the pre-COVID days, which may become a big trend in 2021.
3. Continued adoption of online
It is no news now that COVID has accelerated the adoption of online shopping by manifold, and it is likely to remain high to pre- COVID days. While retailers did adapt to the change to cater to customers through e-commerce/online models during COVID, retailers will need to manage investments into their online models to ensure it remains fit for purpose and supports a larger percentage of the sales.
We expect to see retailers currently operating without an online capability to step up on their e-commerce strategies in 2021. In parallel, those who already have an e-commerce play will look at making that more efficient. For this, retailers will begin looking to embrace options such as dark stores, where items are manually picked for either click and collect or home delivery, or through micro fulfilment solutions via automated operations. Waitrose is one such example being perfectly set up to support local areas John Lewis click-and-collect.
To manage this, retailers hold a small fulfilment centre within their physical store spaces, if they have a surplus. With the boom in online sales, we may also see parcel networks hit capacity, if service starts to be impacted, we may see growth for partner (local) delivery services, such as Uber Eats, Deliveroo, Stuart among others.
4. The revival of the local High Street
Research has shown that consumers have taken a greater interest in purchasing local products/services and in shopping from the local high streets as a result of the pandemic. With consumers expected to look to their local high street for more options, we anticipate greater investment in the high street, more independents, pop-ups while bigger brands will begin refocusing their efforts on meeting the local communities’ expectations.
Some examples of this include implementing last-mile delivery solutions – such as picking orders whilst in the store, click-and-collect and third-party secondary partners just like the partnership between Aldi and Deliveroo for a specific set range of stock. This not only ensures the speed of delivery but also a great customer experience that will encourage people to shop from local high streets.
5. Reshaping the role of customer service
With people buying more online and with a shift to buying more locally, retailers will continuously look to improve the customer service and experience as they deliver products. This is expected to make the delivery driver the new fact of customer experience.
Retailers will look to develop this role from just delivery to selling. One such move could include expanding delivery service to also become ‘out the van’ offerings – selling offers and product ranges and supporting online returns, almost in the shape of a convenience store. This will then begin to diversify what the delivery provider can offer, enabling the last mile offering to expand into the face of customer service and while also becoming a retailer in their own right with the right partnerships in place.
6. Sustainability continues – this isn’t going away
Inevitably, 2020 saw a shift in consumer behaviours and preferences – one key trend we saw was the increased preference for green credentials. Retailers will need to ensure that their product offerings will now take this one step further, by providing that all aspects of their business model are replicating consumer’s sustainability preferences.
One such way is through making their last-mile delivery system green; this will provide retailers with a new opportunity to reach new consumers while establishing the brand identity as being the ‘sustainable option’. Examples of the technology likely to be taken up would be electric vehicles, electric bikes even the autonomous vehicles – such as the Starship Technologies’ ground-breaking autonomous delivery robot in Milton Keynes.
This is just a summary of the key retail trends we expect over the next 12 months, with many more featuring on our longer list which we’ll also be tracking closely throughout the year. As the UK enters the new year with another national lockdown, hope is on the horizon with vaccines being rolled out across the country. If last year is anything to go by, 2021 also promises to be a very eventful year for the industry!