Supply chain disruptions are never convenient. But the severe delivery driver shortage has become a real pain point for retailers — especially those with private label brands.
The highly unpredictable shifts in supply and demand throughout the COVID-19 pandemic led many shoppers to become thriftier and open to purchasing alternative brands, such as those owned by retailers. Over time, they have become consumers’ most valued brands due to their reliably lower prices and equal quality.
That’s great news for retailers, as private label brands are generally very profitable — as long as they can keep those SKUs stocked.
How the Driver Shortage Could Hold Back the Growth of Private Label Brands
With fewer drivers available to get private label SKUs from the manufacturing plant to distribution centers, or even direct to stores, retailers run the risk of losing sales and customer loyalty. If favored products are out of stock, shoppers will abandon their entire cart and go elsewhere — likely to a competitor that has its lower-priced private label items on the shelf.
The problem is that retailers aren’t able to source additional quantities of private label items from elsewhere unless they shift items within their own networks. There are no vendors available to provide backup, so there are no alternative options once these SKUs are out of stock. This challenges retailers to make the right decisions on restocking orders and have an eagle eye on real demand patterns to proactively anticipate and adjust inventory management strategies.
Leveraging Inventory Visibility to Better Plan Private Label Item Movements
With the driver shortage reducing delivery frequency and overall trailer capacity, retailers need a clear understanding of stores’ on-hand inventory, supply chain stock and demand trends. By aggregating inventory-related data captured by associates, shelf-edge cameras, point-of-sale (POS) devices, radio frequency identification (RFID) sensors, and intelligent automation solutions deployed across facilities, retailers can inform and improve their demand planning. If certain private label SKUs are experiencing higher than usual turnover rates due to seasonal demand — or some are found to be stagnant — inventory managers can make smarter decisions about which varieties should be prioritized for upcoming deliveries and help balance shelf quantities. For example, if Thanksgiving trimmings are selling at a high rate in mid-October due to customers’ early holiday preparations, retailers will know to order a product surplus for the next scheduled delivery. This can be achieved while still being mindful of shipping capacity limits when balancing against Black Friday stock up orders.
Gaining Real Time Visibility into When Trucks Roll Can Make All the Difference
There’s a laundry list of things that can impact the timeliness of order fulfillment from the first mile through the last, and retailers need to be aware of what’s happening throughout the entire supply chain so they can turn each challenge into an opportunity. For example, retailers can determine if inventory needs to be balanced if they find out private label items close to being out of stock in-store are still sitting at the cross dock on the other side of the state waiting to be loaded onto a trailer for the final leg of the journey. Or if inbound trucks are delayed due to traffic or weather, retailers can free up labor resources to help with other store tasks for the next few hours. Even knowing if there is a shortage on certain raw materials causing certain varieties of ready-to-eat meals to be temporarily unavailable, can help retailers determine whether to stock up on extra quantities of other varieties to minimize sales loss.
Harnessing the right technology tools, such as track-and-trace software and inventory visibility, will make it easier for retailers to make the best decisions for store operations and a positive experience for customers who are relying on the availability of those financially friendly private label options. Retailers will have the actionable insights needed to keep the right inventory flowing to the right stock locations and customers — and on a more predictable schedule — even as the driver shortage lingers.