Caroline Ellis, Commercial Director at Advanced Supply Chain shares top tips on preparing retail supply chains for the busy Black Friday and Christmas peak shopping season.
1) Consolidate and rationalise
One of the very few positives to come out of the cost of living crisis is a review of warehousing and fulfilment. We’re seeing a growing trend of retailers making these their top two focal points for finding supply chain efficiencies. ASC research last year found that just over a third (35%) of retailers were focusing on fulfilment, with this increasing to half (50%) this year. The focus on warehousing shifted from 50% in 2022 to 57% this year. Honing in on these areas can deliver long-term savings and lay the foundations for eliminating errors and inefficiencies that can otherwise significantly impede performance during busy trading periods and surges in demand.
A lot of focus is being placed on consolidation and rationalisation during inbound and outbound logistics. Retailers are striving to standardise processes across multiple suppliers to streamline how goods arrive in their warehouses. This can optimise storage, handling, and distribution processes by reducing touchpoints, removing labelling and packaging inconsistencies, and reducing vehicle movements and mileage. Efficiencies such as these are a staple part of a well-run nominated carrier scheme and can help create flexibility and capacity for more effectively coping with peak.
2) Audit your accuracy
Transparency and visibility have become supply chain buzz words. Being able to accurately track stock is crucial to the success of inventory management, and the ability to maximise sales opportunities and the value of stock. However, although this is widely appreciated, establishing end-to-end visibility and full transparency of supply chain performance can often be compromised by errors.
Inaccurate data will mask problems in a supply chain, such as the exact details about inventory levels and location. This becomes even more problematic during spikes in demand, when the speed of order placements and processing accelerates. Ahead of peak, retailers as best placed auditing the accuracy of their supply chains to ensure the visibility they’re basing strategic decisions on is providing a clear and genuine picture of their stock inventory management.
3) Don’t delay your decisions
The only certainty of the past few years has been uncertainty. Retail supply chains have had to contend with a whole host of delays and disruption and are now facing increasingly hard-to-predict sales amidst fluctuating levels of consumer confidence and tough economic conditions. In response, we’re seeing retailers diversify and innovate.
Our research found retailers are expanding product lines, growing sales channels, investing in more promotions and discounts, and adding more payment options for consumers – all in attempt to win those increasingly hard-fought sales. These tactics will be reviewed once again, as retailers aim to connect with consumers during peak, and our advice is for companies to be definitive and make decisions sooner rather than later. Supply chain and stock inventory management strategies can then be adapted in plenty of time to embrace changes.
4) Have a plan A, B and C
According to GfK’s Consumer Confidence Index, levels of consumer confidence rose by five points in August, noting a quiet optimism among shoppers and, perhaps, some brighter prospects for retailers heading into autumn. This could pave the way for a healthy Black Friday and Christmas peak – typically a time when shoppers want to celebrate and are more willing to throw caution to the wind when it comes to treating themselves, as well as spending on gifts for loved ones.
Such circumstances make a good plan A for retailers gearing up for peak, but this must be backed up with contingencies. Consumers are continuing to make cut backs and adjusting budgets and spending habits accordingly. Utilising supply chain data, retailers should be creating different models and scenario planning, so that they know exactly when to adjust selling prices and promotions during the busy, fast-moving peak. The ability to act quickly could prove the difference in staying ahead of competitors in what is likely to be a price-sensitive, value-driven peak.
5) Don’t forget, peak doesn’t finish before Christmas
Although the peak period typically focuses on the Black Friday and pre-Christmas selling period, it should also embrace the after-Christmas returns period – a secondary wave of sales opportunities, which retailers must be ready for.
An influx of returned items after the festivities is signal of unsatisfied sales. Consumers will still be looking to replace the items they’ve sent back, and retailers can capitalise on the re-shopping trend by making returns quick, easy, and cost-effective (preferably free for consumers) and by speedily processing refunds. In most cases, this approach can encourage a consumer to continue shopping with the retailer they’re returning an item to, rather than deciding to switch and shop elsewhere.
Retailers need to ensure they are approaching returns as a standalone channel. This will help data to flow through supply chains, ensuring customer expectations about returns status and refunds can be managed, while also supporting the efficient processing and re-sale of returned inventory.
For more information about preparing retail supply chains for peak, contact Advanced Supply Chain.
About the research. ASC and SAPIO Research surveyed 100 UK retailers in September 2022 and July 2023 about how they were adapting to the impacts of the cost of living crisis. Decision makers working for retailers employing at least 250 employees were invited to complete an online survey.