Towards Fully Connected Retail Supply Chain for the Holiday Season

By Bryan Palma, Industry and Solutions Marketing Director, Kinaxis

Supply chain uncertainty has become the norm for businesses in recent years, and that remains the case for the 2022 holiday shopping season. This year, the specter of an economic recession and sky-high inflation are causing consumers to think twice about where they are spending their money. As the holiday season kicks into high gear, retailers are also still facing supply chain disruptions and dealing with the impact of the bullwhip effect on inventory. With so much uncertainty on the horizon, retailers are increasingly turning to technology that boosts supply chain transparency and agility. Here’s what we can expect to see from consumers and retailers alike this holiday season.

This year’s holiday shopping season will be impacted by changing consumer behaviors thanks to increasing inflation. Consumers will likely shop for lower-ticketed brands and items this year and may wait until later in the season to make purchases to take advantage of holiday sales. Unlike previous years when consumers shopped early to ensure backlogged inventory was delivered by the holiday, this year, retailers will likely need to sell lower-priced, lower-margin items and create deeper discounts to remain competitive. While certain products may still be hard to find, widespread scarcity concerns are largely on the backburner. These changing behaviors will also likely result in fewer holiday returns, since consumers are only buying what they need.

To navigate the new world of supply chain uncertainty, labor shortages and increasing inflation, retailers need to embrace a holistic, integrated technology-based vision of supply chain planning to create a seamless shopping experience for all.

Recently, brands like Walmart and Nike slashed prices to clear a glut of inventory, and that trend will likely continue throughout the season. Unlike last year, when hot toys were hard to find thanks to material shortages, supply chain issues and challenges with forecasting demand, this year retailers are finding themselves flooded with inventory as delayed shipments finally arrive. This situation is a classic example of the bullwhip effect, in which small fluctuations in demand can create massive impacts on supply levels.

This bullwhip effect is putting significant pressure on supply management systems and warehouses. With stock rooms already overflowing, retailers may look to limit the practice of accepting free returns. That trend will likely accelerate in 2023 as higher shipping and labor costs continue to make processing returned goods more costly for companies. Despite the fears of a recession, the tight labor market will also be top of mind for retailers looking to hire seasonal employees. October’s jobs report showed the labor market remained hot, despite the Federal Reserve’s attempts to cool it down, meaning retailers may have a difficult time finding seasonal employees. As another challenging holiday shopping season begins, it will be important for retailers to find the right supply chain technology that can provide visibility and transparency across their network to be agile in the face of disruption.

To overcome the expected challenges of the 2022 holiday season, retailers will need to rely on supply chain technologies that can help them stay ahead of fluctuations in inventory and changing consumer behaviors. The unique technique of concurrent planning offers retailers the tools to do just that, by creating end-to-end transparency across the supply chain and enabling agile and informed decision-making.

With transparency into every part of a supply chain, retailers can anticipate delays and take proactive steps to solve problems before they impact customers. For example, concurrent planning can warn a retailer that there are delays at the plant that produces the packaging used for a new line of high-end sneakers. This transparency into how a disruption impacts the entire supply chain happens in seconds, so that retailers will be able to get a jump on finding a replacement source for the packaging. This will minimize the disruption that this supply issue causes and ultimately meet the needs of the customer, while saving the company money. Even if the retailer can’t replace the packaging in question, being armed with real-time information gives them more time to run alternate scenarios, adjust delay dates and manage customer and partner expectations.

Three Ways Retailers Can Counter Supply Chain Disruption and Inflation This Holiday Season

By Matthew Furneaux, Director of Location Intelligence, Loqate

As retailers adjust to continued supply chain disruption, shoppers have already begun making their gift lists. Add in the challenge of growing inflationary pressure on businesses and consumers alike and it’s clear that this holiday season is on track to give retailers the gift of uncertainty.

With the potential for decreased consumer spending, competition among retailers will be high this year. These three tips can help retailers meet customer expectations and hit revenue goals despite supply chain disruption and economic uncertainty this holiday season.

Black Friday, Cyber Monday and the first two weeks of December are the biggest shopping events of the year. Now is a good time for a thorough analysis of previously experienced outages and performance issues. It’s important to determine what caused the issues and resolve them in advance. eCommerce teams should work closely with IT teams to make improvements and add memory when needed.

Retailers can appeal to consumers with promotions that reward them for shopping early which, in turn, can help optimize inventory. Consumers also want transparency. Providing visibility into inventory and shipping windows can also help shoppers make smart decisions. While it may cause a retailer to lose one sale, it could also preserve customer loyalty. The cost of losing a single sale is far less than losing a customer for good because of an inability to fulfill and deliver an order on time.

Just under half (47%) of businesses rate the accuracy of physical address data as “critical” for first-time delivery, yet 74% of businesses point to bad address data as the cause of up to a quarter of their deliveries failing. The same proportion of businesses agree that customers often don’t realize a mistyped address can cause a failed delivery. In these instances, address verification can provide a vital failsafe.

Whether it’s a lapse in concentration, the slip of a finger on a mobile device or a missed field, shoppers often unknowingly provide incomplete or inaccurate address information. This faulty data impacts delivery to the right address, leading to delays, customer frustration and costly redelivery fees. Eight percent of domestic first-time deliveries fail, costing retailers an average of $17.20 per order or $197,730 per year.

A real-time type-ahead address capture solution allows retailers to collect accurate customer addresses in online forms and checkouts. Not only is it the quickest and easiest way to capture address data, it’s also the friendliest solution for mobile commerce. With type-ahead address lookup, a customer can typically complete an address capture with as little as six or seven keystrokes.

Amid economic challenges and shifting consumer preferences, a data-driven strategy will be critical for responding to conditions in real time. While retailers can’t stop inflation, it’s possible to recession-proof our businesses by improving profitability and solving for operational inefficiencies.

While retailers can’t stop inflation, it’s possible to recession-proof our businesses by improving profitability and solving for operational inefficiencies. Embracing a data-driven strategy will be critical for responding to conditions in real time.

Today's consumers have fully embraced the omnichannel experience. Adopted from the "buy online, pick up in-store" (BOPIS) method, curbside pickup allows shoppers to access necessary items without leaving their cars. Initially designed to protect both customers and employees by limiting the amount of person-to-person contact, it also promotes convenience and accelerates buying interactions. However, this practice does not come without its challenges. Failure to organize customer data and validate orders can put a hitch in this otherwise seamless process.

With convenience at the forefront of customer needs, retailers must ensure they collect high-quality data across all points of sale.

With a proactive approach and data-driven strategy, retailers can adjust and adapt to economic forces, supply chain challenges and shifting consumer behaviors. Efforts by retailers to improve the shopping experience and fortify their supply chains today have the potential to increase customer loyalty and drive revenue in the months and years to come.