As retailers continue to navigate the disruptive factors that have forever altered the way they do business, ongoing and emerging challenges continue to drive transformational change.  Massive shifts in consumer behavior have propelled omnichannel retailing, driving retailers to expand and enhance options for shopping and fulfillment. These impacts have dramatically impacted the way retailers need to forecast demand and manage their largest investment: inventory. Further complicating this challenge is the uncertain availability and timing related to the ongoing global supply chain issues.

Moving into 2022, we see three key retail trends emerging, which highlight the capabilities retailers must strengthen to improve their ability to meet customers’ needs and drive bottom line profits.

Data science and advanced analytics become mainstream in the business.

  • Data science comes out of the “shadows” of IT and/or finance and is more fully embraced as a key leverageable skillset that all retailers can turn into a true strategic capability.

  • Retailers infuse data analytics into business processes such as merchandising, pricing, promotions, and operations to influence business decisions.
  • Demand forecasting accuracy is enhanced by improving and expanding internal and external data inputs. Better forecast accuracy mitigates the volatile and unreliable historical data (LY, LLY) that has defined the last several pandemic quarters.
  • Retailers will integrate a single, improved demand signal to downstream execution systems and enable much tighter collaboration throughout the enterprise and supplier networks.

  • Results as a service (RAAS) analytics delivery models gain popularity for retailers who have yet to mature in this space.

Sustainable supply chain resiliency moves to a top priority.

  • The pandemic and its lingering after-effects further prove that supply chain excellence should be a top priority for all retailers. And resiliency must be sustainable.

  • End-to-end inventory visibility from the factory source to retail store shelves moves to the forefront of supply chain initiatives as retailers, blinded by pandemic delays and other disruptions, strive to get out in front of the inventory risks that affect customer satisfaction.
  • Strategic sourcing shifts to strengthening the supply channel by moving away from traditional single-threaded relationships. Driving purchasing volume through a few key suppliers is no longer prudent. As such, new supply chain models will expand supplier networks to minimize risk and maximize agility when the supply base becomes disrupted.
  • Allocation and replenishment capabilities will expand with supply chain influences, as opposed to the traditional reactive, task-based view related to the typical merchandising cycle.
  • The supply chain will strongly influence fulfillment processes to provide better input in order and delivery cycles.

Omnichannel quickly matures (this time correctly)—and with more competitors.

  • Retailers finally get omnichannel capabilities right—or at least much closer to right.  Many will correct the issues of pandemic-initiated band-aid approaches with improved master data, infrastructure, processes, and software to create a forward flexible omnichannel experience for their customers.
  • Retailers strengthen capabilities around real-time inventory and visibility. Better inventory accuracy leads to improved ability to meet customer demand, especially related to exposing all inventory, including stores, to fulfill omnichannel orders.
  • More direct-to-consumer (DTC) retailers will expand their footprint into traditional bricks-and-mortar retail locations.  They take advantage of surplus retail space to begin reaching a new set of customers and expand their physical presence.

Putting these three key retail trends together, a significant driver of optimized omnichannel and supply chain capabilities is the infusion of advanced data science. Retailers are exploring ways to quickly adopt advanced analytics with expanded data sets into their business processes and drive better inventory and supply chain decisions throughout their retail channels.

Lee Whitaker, Senior Manager

Lee Whitaker
Senior Manager

Mike Johnson, Senior Manager

Mike Johnson
Senior Manager

The Parker Avery Group is a leading retail and consumer goods consulting firm that specializes in transforming organizations and optimizing operational execution through the development of competitive strategies, business process design, deep analytics expertise, change management leadership, and implementation of solutions that enable key capabilities.

Published On: January 13, 2022Categories: Agility, Analytics, Inventory, Lee Whitaker, Mike Johnson, Supply Chain