The serious impact of the coronavirus on the global economy has opened the eyes of retailers. With many hard and valuable lessons learned in a matter of months, fashion and apparel brands are reevaluating their supply chains to identify ways they can be more resilient, agile and robust, especially as they seek to recover from the worst disaster to affect the industry in decades.
As we look forward to the next few years, what will the supply chain look like? And how can retailers prepare for any future crisis that will shake the industry?
Here are three key trends that are a must for success in a post-COVID world.
1. Changes in Inventory Management
Unsold inventory is typically a retailer’s biggest asset, and the only way to ensure business continuity is to sell it. However, because of store closures and low consumer demand due to shelter-in-place legislation, many apparel retailers experienced a glut of inventory, seemingly overnight. This forced them to liquidate merchandise at a steep loss.
To address this challenge, retailers must turn inventory into cash in the fastest, most profitable manner. Retailers can prepare their supply chains for unexpected circumstances with digital transformation, taking advantage of emerging technologies such as artificial intelligence, blockchain and IoT. Digital transformation will help retailers make and execute decisions much more quickly, based on rapid changes in demand.
2. Investment in Crisis Mitigation
COVID-19 taught retailers that crises happens in ways that they might never expect, exposing supply chains to unimagined vulnerabilities that can develop quickly. How can retailers prepare for the next global supply chain shock? They must invest in the technology and processes needed to be ready for the next crisis.
To mitigate the impact of supply chain disruptions, companies will need a digital supply chain that unifies all the systems, applications, processes and information in the supply chain, connecting all stakeholders on a single digital platform — which makes it an essential platform for managing a supply chain crisis. It can be utilized for demand planning and forecasting, postponement techniques, vendor management and sourcing, omnichannel inventory visibility and much more.
By being able to quickly react to changing circumstances, retailers will be well-positioned to weather whatever storm comes their way.
3. Increased Emphasis on Sustainability
Despite the pandemic sweeping the world, sustainability remains top of mind for fashion brands and retailers. For example, big brands like Walmart partnered with ThredUp to sell pre-owned items and Allbirds and Adidas are working together to create a sport performance shoe with the lowest carbon footprint ever.
Consumers are looking for good value, beyond just price, which encompasses everything from environmental practices to social responsibility.
Sustainability will continue to be a focus for consumers and businesses moving forward in the fashion and apparel industry, which is why now is the time to reevaluate and rebuild supply chain processes with a much greater emphasis on transparency. Companies must measure initiatives effectively, provide real-time data and clearly define the goals necessary to make real change.
A New Chapter Ahead
The pandemic shook the fashion and apparel industry to its core, but with it came important lessons about the supply chain that will stick with retailers for years to come. By rethinking processes and focusing on these important issues, retailers will be able to pivot quickly and react when the next crisis hits. Retailers who prepare now can come out of this stronger than ever before.
Mark Burstein is president of NGC.