CSA Q&A: Holiday success requires supply chain transparency

Expected surges in holiday e-commerce, along with unpredictable demand spikes, mean retailers must collaborate closely with suppliers.

Jeff Orschell, Americas Retail Leader at professional services firm EY, recently sat down with Chain Store Age to discuss how retailers should adapt their systems and processes to manage the dual challenges of holiday demand and the continuing impact of COVID-19.

How will surging e-commerce demand impact retailers' supply chains?
According to EY’s latest Future Consumer Index, consumers are still hesitant to re-engage in normal pre-pandemic activities. As of mid-July, many consumers were still uncomfortable going to a mall (39%) or trying on clothes in a store (46%). This shift in consumer behavior is creating an expected surge in e-commerce and a rise in alternative purchasing methods (curbside pickup, mobile ordering, etc.). 

And with big-box retailers and e-commerce behemoths alike pushing up Black Friday deals from November to October, we can expect to see an increase in demand as early as Nov. 1. To get ahead of this spike, retailers must work in tandem with shippers to mitigate constraints in real-time and ensure end-to-end transparency - from time of purchase to time of delivery. This is especially important since most shippers have been operating at peak capacities throughout most of COVID-19.

What steps can retailers take to recalibrate their supply chains for increased e-commerce fulfillment needs?
Consumers are not willing to sacrifice customer service this holiday season, even amid a pandemic. According to EY’s latest index, only 21% of consumers are forgiving brands and stores whose service has been disrupted by COVID-19, and 43% note that the quality of service has become a bigger priority for them than it was in the past. Ongoing shifts in consumer behaviors and preferences have only exacerbated the challenges that many retailers were already facing with supply and demand, sourcing, channels, prices and portfolios.

Retailers need to recalibrate their supply chain and closely collaborate with shippers to share forecasts, consolidate shipping points, and encourage shipping to hub locations/lockers. Retailers should also encourage and promote BOPIS, and start promotions early and spread them across the entire holiday season. Being agile, thinking strategically, and collaborating with all the players in the supply chain ecosystem is essential for all retailers to keep up with demand.

How can retailers offer customers a more personalized experience in the wake of COVID-19?
Digital customization will play an even more important role this holiday season, with 80% of consumers noting that they are more likely to purchase a product or service from a brand who provides a personalized consumer experience. With many consumers eliminating their in-store shopping sprees in favor of a digital approach, retailers must go above and beyond to exceed consumer’s customization demands where it matters most - online.

In 2020, there is no ‘average shopper,’ and an omnichannel strategy will drive hyper-personalization throughout the entire consumer journey. Improving the user experience will be critical in cultivating strong customer relationships and ultimately becoming the retailer that consumers have most top of mind. This includes everything from offering online-only discounts and rewards to creating new, digital-focused loyalty programs. Those companies that can strike the perfect balance between customization and digital efficiency will come out ahead this holiday season.

What general steps can retailers take now to ensure a successful holiday season?
This year has not been easy for retailers across the U.S In fact, 29 big retailers have filed for bankruptcy since the start of the pandemic. Those businesses that survived have proven first-hand that agility and resilience are no longer nice-to-haves, they are must-haves in today’s new world.

This holiday season will be the next test on retailers' longevity and survival. October is shaping up to be the most important month in retail since January - and retailers must prepare accordingly. This includes ensuring worker safety. Safety will change how consumers engage with retailers and brands both in person and online - and that trend will continue long past the pandemic.

Today’s consumers are not only looking to retailers and brands to provide a safe environment and safe products, but are also willing to do their part. For example, according to EY’s Fourth Consumer Index (from mid-July), 69% of consumers will be comfortable having their temperature taken to be able to go to a store, and 66% will be more cognizant of hygiene and sanitation when shopping. In addition, 64% of consumers will be more aware and cautious about their physical health, and 45% will use contactless delivery or cashless payments to avoid touching things while shopping.

Early-access promotions will be top of mind for consumers, with price being a main concern (and priority) for consumers this holiday season. When it comes to price, consumers are pivoting towards more affordable options, and in the U.S., we may even see a shift away from brands toward private label -- a majority of U.S. consumers noted that they are willing to purchase store brand packaged food (61%), home and household items (56%), and fresh food (54%).

The COVID-19 pandemic left no supply chain inefficiency unnoticed. As such, retailers must make strategic decisions and take fast action in order to future-proof their systems for the anticipated spike in e-commerce this season. Focusing on complete visibility throughout the supply chain will help retailers predict issues and potential delays, provide insight into demand volumes and improve overall delivery time.