Stock management will continue to be a problem for the foreseeable future. But with a little extra planning and communication, retailers can turn the challenge into an opportunity.
The post 5 practical lessons in fighting the global supply chain crisis appeared first on Inside Retail.
By now, retailers know all too well that Covid-19 and supply-chain issues go hand in hand. Since the pandemic reared its head, we’ve seen cargo ships rerouted, entire countries wiped off theB delivery map, and estimated shipping times pushed back weeks or even months.
February 2022 data from the Australian Bureau of Statistics (ABS) shows that over a third of all businesses experienced supply-chain disruptions, with the most common issue, domestic and international delivery delays, affecting 88 per cent of businesses. A further 80 per cent had supply constraints and 75 per cent had seen increased costs, including for transport.
While it feels like the pandemic is turning a corner (in some states at least), Covid-related supply-chain issues look set to stay for the foreseeable future. Here are five ways retailers struggling under the weight of supply-chain woes can turn things around.
One sensible solution to a disrupted supply chain is to carry more stock. For some retailers, however, this is easier said than done, especially those with limited cash reserves and a lack of warehouse space.
More stock means more working capital will be tied up, but it also means you’ll be able to mitigate supply-chain shock. Be smart about what you choose to double down on: stick to your most popular SKUs and ideally products that can be sold not just in a single season, but throughout the year.
When shifting your stock strategy, it’s important that your financial partners understand the new plan you’re putting in place. As with any important business decision, communication is key.
While seasonal products are never going away, it pays to slow down on stock that will be out of date and unsellable in a matter of weeks or days. Instead, focus your extra stock reserves on products that will remain sellable throughout the year.
These could be timeless pieces that are always in style or functional items that customers will need to purchase repeatedly. Dig into your data and find out which products remain strong throughout the year, and focus your stock reserves on them.
One solution to the complexities of holding more stock is to invest in products that are smaller, lighter, and cheaper, but still provide ample opportunity to surprise and delight your customers. Smaller products drive a higher return per square metre in-store than apparel and, therefore, generate a higher ROI on your fixed rental costs.
Impulse purchases, for example, are smaller, functional items that customers need no matter the time of year: from lip balm, to mirrors, to hair scrunchies. Impulse and accessories will help drive incremental sales and ultimately drive a bigger average basket size – without stuffing your warehouse to the rafters.
A diverse supply chain is a healthy supply chain. Smart retailers should take care to ensure they’re not overly reliant on any one country for their product supplies.
Where possible, the simplest solution is to find domestic manufacturers, which will seriously reduce risk. This is not only a great way out of the supply-chain crisis but directly plays into the increasing consumer demand for Australian-made products.
In fact, recent consumer research by Roy Morgan suggests that 80 per cent of Australians opt for Australian-made food and drinks over imported foods, while 73 per cent prefer locally made toys and baby care products. While Australian-made isn’t possible across every category and price point, it still pays to consider how you can realistically work it into your business.
It might feel like things are gradually returning to normal in some states around Australia, but that doesn’t mean our supply-chain woes are over just yet. With issues predicted to continue into 2023 at the very least, it’s critical that retailers stop treating the crisis as a temporary issue.
The good news is that a crisis provides many opportunities for growth and change. Supply-chain issues are driving a shift towards buying local, improving the customer experience, and slowing down the trend cycle. This sustainable mindset will be good for both the planet and the long-term growth of your business – even when the crisis finally comes to an end.
The post 5 practical lessons in fighting the global supply chain crisis appeared first on Inside Retail.
