2024-25: Key Considerations for the Retail Supply Chain

What do retailers, brands, and their manufacturing partners need to think about to optimise supply chain operations in 2024 and beyond?

Online growing share of retail sales

TREND Online sales as a percentage of total retail on the rise. Online accounts for 26 per cent of total UK sales which is up from 19% pre-pandemic, according to Office for National Statistics data.

SUPPLY CHAIN CONSIDERATIONS

• Advanced Omnichannel Merchandise Planning. As retailers continue to see a greater mix of online and physical store sales, the job of getting the right product is in the right place at the right time becomes ever more complex. The best-run retail supply chains are those where a retailer has a single pool of stock serving each of its sales channel, as that enables for optimal distribution and fulfilment. For instance, it may be more prudent for a local store to fulfil an online order if it holds the relevant stock and is closer to the end customer than the warehouse is. For brands and manufacturers serving retail stores, wholesale, catalogue and eCommerce channels, advanced planning solutions make it easier and more efficient to understand and predict demand, and create, review, manage, merge and adjust plans throughout the supply chain. This technology can bridge the gap between buying, merchandising, design, allocation, financial planning, costing and production.
• The rise of new technology. A raft of new technology is available to retailers looking to run more efficient and productive supply chains. From automation in the warehouse, which retailers such as JD Sports, Frasers Group, and Next continue to roll out to speed up the picking, packing, and bundling process for online orders, to the continuing maturity of generative artificial intelligence (GenAI), which many retailers are experimenting with to speed up the design process, create product description pages, or power online chat services, the use of emerging tech is prevalent across the retail industry. Analysts are expecting GenAI to fuel the rapid deployment of virtual fitting and try-on technology that will generate swathes of new data to help retailers better shape their customer proposition. Work prompted by these insights such as adjusting designs, changing materials, and updating product specifications can be conducted with integrated product lifecycle management (PLM) and shop floor control (SFC) solutions.
• eCommerce Connectors. A successful modern eCommerce operation typically entails selling on owned channels and third-party platforms such as marketplaces, as well as creating crucial link-ups with dedicated logistics providers. Whether its order management, inventory data, or logistics information, there is a raft of data that needs to be shared with partners in the eCommerce ecosystem to ensure retailers continue to transact seamlessly across different channels. The only smooth way of facilitating this is use of automation, such as CGS BlueCherry® eCommerce Connectors which provide seamless integration to online shopping sites and platforms, including some of the most popular such as Amazon, Shopify, Big Commerce and Magento.

Getting to grips with returns

TREND: Growing returns rates. The UK fashion industry loses at least £7bn annually due to returns, according to a report from the British Fashion Council.

SUPPLY CHAIN CONSIDERATIONS

Collaborative Planning. Retailers, particularly in the fashion sector, are inundated with product returns – it’s adding operational costs that are affecting margins and generating waste. Several retailers, including H&M, Boohoo, and Zara owner Inditex have started charging customers for online returns in an attempt to reduce the number of items flowing back into their supply chains, while others are using GenAI to crunch customer feedback data and try to understand the reasons why shoppers are sending products back. Indeed, retailers and brands continue to collect consumer data at a faster rate than ever before, so should have greater insight into what will reduce the number of product returns. This information needs to be shared with suppliers so that future manufacturing can take into account factors that might trigger a return. Technologies such as B2B eCommerce, digital product catalogues, and PLM can support deeper collaboration at the early stages of research and development that might help create products consumers do not feel they need to return.

Quality. Whether it’s deterrents such as returns fees or tools to help get sizing right first time, there are several levers retailers can pull to try and stem the tide of returns. Ultimately, though, much of how consumers behave is out of retailers’ control. What they can control, however, is the quality of the item they bring to market. When consumers are satisfied with quality, fit, and value, they are more likely to keep hold of that product as well as return to the retailer or brand for further purchases. To ensure quality, retailers and brands can leverage integrated PLM and SFC for clear communication across the supply chain – this approach also enables them to spot problems with quality or product development in good time.

ESG agenda demands supply chain transparency

TREND: Sustainability and social responsibility strategies require transparency. Retailers and brands are mapping out their supply chains to meet environmental, social, and governance (ESG) agenda.

SUPPLY CHAIN CONSIDERATIONS

Supply Chain Visibility. Retailers including New Look and River Island continue to put a concerted effort into mapping out their supply chains in 2024, as the need for transparency becomes ever-more important. Larger organisations in retail are required to report on their carbon emissions and set targets that will take them towards net zero, while also illustrating their supply chains are doing all they can to rule out malpractice in the factories and fields where products are made or sourced. Any sustainability strategy starts with supply chain transparency, so retailers and brands need to use the tools and connected supply chain technology available to build a clearer picture of their entire value chain. From there, they can build improvements and progress their ESG work based on accurate data and supplier information.

Stronger supplier collaboration. Collaboration is crucial in any ESG work, and retailers in 2024 must work much closer with their suppliers to better understand materials they use and how they source them. It is what customers and legislators are demanding. Many retailers are also changing their supplier base as they look to work with the most transparent, ethical, and sustainable companies to ensure they can confidently talk up the strong EG credentials of their supply chains. Digital design and development processes can help keep much of this information shareable between retailers and suppliers, while centralising data management through PLM can makes it easier to maintain updated information on today’s crucial elements, such as sustainable fabric libraries, accurate production and operator pay records, and vendor compliance scorecards.

Circularity. Repair, rental, resell – circular consumption concepts are increasingly appearing in retailers’ and brands’ marketing promises. There is a booming resell market in the UK and Europe, while retailers are also looking to add rental ranges and repair services to their offering in order to cater for shoppers keen on extending the longevity of products in response to the ‘throwaway’ fashion culture that has emerged in recent years. SFC gives brands and their suppliers visibility to factories able to help with alterations, while PLM and other connected supply chain technology can help retailers develop products with longevity in mind allowing them to keep items in circulation longer and potentially earn revenue multiple times from the same goods.

Would you like to discuss eCommerce, returns or supply chain transparency processes and technology solutions? CGS BlueCherry® is committed to understanding your company’s objectives and partnering with your team to achieve your goals. Contact us to discuss your needs and priorities. We also welcome you to view our emerging tech trends webinar series.