Article | Future Cities

Four key learnings that have shifted retail supply chains during the pandemic

09 Dec 2021

By Christine Miller

Four key learnings that have shifted retail supply chains during the pandemic
Over the past 18 months, multiple lockdowns throughout Australia and temporary closure of bricks and mortar stores led to a pandemic-fuelled boom in e-commerce and online shopping. This shift affected all consumer goods businesses including food, FMCG, homewares and fashion. For retailers in particular the impact to supply chain has been felt throughout the distribution supply chain.

As restrictions and borders continue to ease, we take a look back to uncover lessons learned as well as a look forward, anticipating what supply chain shifts are still ahead of us. 

Increased Need for Operational Space
Many of our clients who experienced immediate upwards pressure on sales from the e-commerce boom needed to relocate to larger industrial and logistical sites to increase their operational space and efficiency as well as hold increased inventory levels. These moves also allowed companies to re-evaluate how to best utilise space, when considering health and safety measures, to protect both staff and customers.

As a return to in person shopping resumes, businesses now need to return to manage their omnichannel shopping experiences.  The needs for store distribution and online order fulfillment are different and while our shopping habits will now move more fluidily across these channels, the need for extra space will remain firmly on the agenda for retailers. 

Sustainable Returns and Product Handling 
Australians took advantage of retailers offering free shipping and easy returns which were offered to keep sales volumes up.  While the ease of returns is a great consumer benefit, it’s complicated and expensive for retailers who often struggle with the re-entry of product back into the supply chain. The labour required, additional transport and wasted packaging are have sustainability impacts as well as costs.  If returned products can’t re-enter the sales cycle, they move into the disposal mode.

The average Australia disposes of 22 kilos of apparel waste each year creating volumes of product to be disposed of. Retailers are focusing on reusable packaging for returns as well as improved product handling to minimise waste and specialist service providers are stepping into this space to provide new and innovative solutions.  

Nimble Technology
The eCommerce boom has increased the deployment of technology focused on the item pick-n-pack and order fulfillment operation within the warehouse.  Nimble technology that can be deployed into existing warehouse sites without bespoke or highly specific building infrastructure has meant a much larger range of users can incorporate technology into their supply chain at a lower more manageable CAPEX level.

As an example, AMRs (Automated Mobile Robots) are able to dramatically increase throughput for a retailer in an existing site accommodating growth in sales without scaling a manual labour force. Considering the challenges of the recent pandemic, the work health and safety improvements of using automation are an additional benefit.  

Integrated Inventory Model 
The pandemic forced retailers to re-evaluate how they classify their inventory. Previous allocations of dedicated store inventory were transitioned both physically and virtually to online inventory available for order fulfillment.  The learnings have been that this wholistic approach is most efficient in managing inventory holdings on redundancy.  As we move into our new normal, the multiple sales channel structure will require additional inventory holdings in more locations to meet consumer demands on delivery times.  Having a well optimised inventory will enable retailers to minimise costs while maximising orders.