Supply Chain Feature: Hungry, Hungry Shoppers
“Consumer demand is pent up and it will be unleashed when this is over,” Nada Sanders, professor of supply chain management at Northeastern University, said during her keynote presentation at last month’s PLMA Live! Presents Private Label Week.
Sanders was addressing a new supply chain dilemma that, by her calculations, retailers and suppliers could be facing as early as this summer. It is a post-pandemic boom of shoppers looking to hit stores and feel closer to normal again. It is a vision of shoppers hungry to explore, discover and shop like it’s 2019 again.
If that were to happen, Sanders said retailers could face another supply chain under duress, and she cautioned merchants to begin monitoring product lead times. She said to create a matrix, sorting by customers, products and suppliers and organize them based on importance and vulnerability. Sanders stressed that retailers and suppliers are in a tough position. The primary goal is to stay financially afloat and make it to the summer recovery, while also maintaining their current market position.
In the meantime, she suggested retailers quickly find alternative sources of supply, as well as gear assortments toward what shoppers are looking for — multipacks, on-the-go products and comfort goods. She also suggested for companies to hire a futurist — a person who can help their organization think differently about the months ahead and how consumers might behave coming out of a pandemic. She said a futurist will be able to identify emotional needs and buying patterns and tap into the factors consumers cannot articulate themselves. The insights could lead to timely product development and help them understand historical shopping data that does not apply to this unprecedented situation.
E-commerce Driven
Jeff Pepperworth, president and CEO of iGPS Logistics, said that one continuing trend to come out of the pandemic will be the rise in online shopping. “Brick-and-mortar will be seen more as a way to get out of the house, and less of a destination for a shopping experience,” he said.
Retailers accelerated how they use online over the last year, a trend Pepperworth does not see changing any time soon. “Retailers now have the ability to get new items online in as few as 24 hours, and this will impact how they determine min/max carrying levels at brick-and-mortar sites,” he said.
Pepperworth cited club stores as an example of realizing huge increases in online spending and curbside pickup. This month, digitally enabled sales at BJ’s Wholesale Club jumped 168% in its quarter ended Jan. 30, whereas physical stores showed comparable-store growth of 13%. Costco reported digital sales increased more than 80% during its second quarter ended Feb. 14 while same-store sales were up 12.6%.
Subodha Kumar, professor of marketing and supply chain management at Temple University, agreed that retailers need to be prepared for online shopping to remain a regular habit. During the peak pandemic, he said a large percentage of customers over the age of 60 went online, and 41% of U.S. consumers bought groceries online for the first time.
If a boom were to occur in the summer months, Pepperworth said the market could see heavy discounting to move product both online and in stores. “Seasonality is now disrupted across many retailers, and with the ports still backed up, there is a lot of merchandise that will be temporarily unavailable but will later flood the market,” he added.
Like many supply chain and logistics companies helping retailers and suppliers manage these supply chain shifts, iGPS maintains constant communication with its clients. “We work directly with our manufacturing customers and have full visibility into their demand needs, which enables us to help them scale in real-time to meet the evolving demands of retail stores and consumers,” Pepperworth said. “Being able to ensure that the right products, in the right quantities, are quickly available online and in brick-and-mortar stores has made us a very vital component of the supply chain.”
Kumar said retailers need to rethink supply chain strategies and push more toward technologies like Blockchain that can improve the speed of information sharing, visibility and security. “We will also see more use of 3-D printing and related technologies, because such technologies can reduce reliance on suppliers in case of any emergencies,” he noted.