Supply Chain Woes Won’t End With the Holiday Season, it’s Time to Look Beyond 2021

It’s no secret, supply chain disruption has been dominating the news. While many of the supply chain conversations have been centered around the recently passed holiday season, the issues won’t end in this new year. Supply chain inefficiencies will plague retailers well into 2022 and potentially create ripple effects beyond that.

With the tremendous growth of e-commerce in 2020 and 2021, a wider array of companies and product launches entered the marketplace, giving consumers more choices, challenging both the calendars and services of traditional retail. Faster speed to market for new products and shopping in season have become the norm.

For example, influencers can now create a product line in record time and reach a growing number of potential buyers on social media in mere minutes. This trend, along with the continued popularity of fast-fashion like H&M and ultrafast fashion like Shein, has shrunk the supply chain timeline for legacy brands and created new expectations from consumers. Now add disruptions at ports or sporadic factory shutdowns from the pandemic or even power issues. The reality is that speed, customer expectations and supply chain disruptions are the new normal. Businesses that traditionally bought for future seasons or planned their seasonal promotions months in advance will have to adapt long term.

So how can retailers deliver a great customer experience despite continued supply chain disruptions? By focusing on agility, repositioning merchandise, and incorporating dynamic pricing as it pertains to both the business needs and industry trends.

Focusing on Agility

As more consumers shop online post-pandemic, retailers have access to more data than ever before. With this wider breadth of granular data regarding customer behavior both internally and across competing brands and products, retailers can act more surgically and respond to ongoing challenges seamlessly. For instance, retailers with more visibility into their supply chain and the market factors impacting it can pivot plans to achieve the highest margins despite the disruptions.

For example, Arcadia Group, a U.K.-based retailing company with brands like Topshop and Burton, has found success in planning assortments daily to keep up with the fast-paced leisurewear industry. This allowed Arcadia Group to rely on the most updated information about the industry rather than the seasonal trends of years past.

Repositioning Merchandise

When curating a product assortment, retailers should focus on three things: maximizing current supply chain capacity, meeting customer needs, and differentiating from competitors. If other stores are focusing on timeless basics like T-shirts for fear of shipping delays, consumers may be craving more seasonal pieces. In fact, sell-outs are currently surging in activewear, underwear and dresses, yet the number of products in these categories currently available at U.S. retailers is down.

This provides an opportunity for retailers to differentiate themselves by filling this need. For example, Abercrombie & Fitch repositioned inventory and started assessing its merchandising strategy against its competitors, customer demands and sell-outs. In doing so, the retailer was able to offset delays and boost sales and loyalty on a regional and global basis.

Incorporating Dynamic Pricing

It’s more important to achieve the “right” price than it is to achieve the “lowest” price. As we learned with Black Friday and Cyber Monday over the last two years, bigger discounts don't always equal a higher rate of sell-out, even when the retailer is pushing to sell out-of-season inventory. On the opposite side of the spectrum, as supply chains continue to restrict assortments, prices will naturally need to rise. It’s critical that retailers know when to stop raising the price to avoid ostracizing cost-conscious shoppers.

The most successful brands utilize dynamic pricing to consider market price points and other discounting strategies like “spend more, save more.” For example, our client PUMA reported stronger margins and improved profitability after incorporating dynamic pricing.

Understanding Leads to Optimizing

It’s easy for retailers to be overwhelmed with the new speed of retail and the seemingly unending list of challenges facing the industry. Data and analytics provide relief for retailers by giving them the tools they need to make the best decisions every time, despite supply chain disruptions.

Juliana Prather is the chief marketing officer of EDITED, a market intelligence platform that enables competitor and enterprise retail analysis and automation, empowering buyers, planners, merchandisers and marketers to grow profits.