Guest Column | August 4, 2020

What To Expect In The Retail Supply Chain's Next Normal

By Susan Pichoff, Senior Director, Community Engagement, GS1 US

Retail Mobile Shopping Risk

If 2020 has taught us anything, it’s that we can’t predict the unpredictable. As the COVID-19 pandemic continues to affect our daily lives, the retail industry is reeling from furloughs, store closures, stay-at-home orders, and plummeting consumer confidence.

However, in these tumultuous times, there remains an opportunity to adapt and pivot to win the trust and loyalty of consumers. Retail’s “next normal” will need to reflect a sharper focus on consumer needs, taking into consideration the safety of shoppers, their thirst for information, and how their rapidly changing behaviors impact the retail supply chain. The following are four predictions for the rest of 2020 and beyond.

An Accelerated Focus On Contactless Options

With malls and stores closed, apparel and general merchandise retailers quickly pivoted to offer curbside pickup during the pandemic, understanding that consumers needed safer and more convenient shopping options and that often, home delivery can be costly. In June 2020, 34.1 percent of the top 1,0000 apparel merchants in the U.S. offered curbside pickup, up from just 1.6 percent in January, according to Digital Commerce 360 research. Curbside and other contactless options are here to stay.

As a result of this phenomenon, accurate and complete product data has never been more important. Members of the GS1 US Apparel and General Merchandise Initiative have already been focusing on product data accuracy during the rise of omnichannel retailing over the past several years. The collaborative group of retailers, brands, solutions providers, and other industry stakeholders have developed guidance on product information accuracy and data quality best practices. To make the curbside customer experience efficient and successful, retailers and their partners must ensure product data is accurate and complete to present the consumer with a realistic view of the product online.

Trading Partner Diversification And Collaboration

More than 50 percent of the department stores anchoring America’s malls are predicted to close permanently by the end of next year, according to Green Street Advisors. Massive brick and mortar consolidation will bring new trading partner relationships and the increased need for standardized data to support collaboration across the supply chain. With potentially fewer brick-and-mortar retailers to sell through, brands may seek out new partnerships with online marketplaces, with a need to have their data optimized for selling through new channels.

Throughout the pandemic, companies that operate in a standards-based framework with their partners have noted that they were able to act with more agility than some of their competitors. Unique product identification, a key component of standards-based systems, is critical to this agility. Unlike proprietary numbering systems, identifying products with Global Trade Item Numbers (GTINs) helps brands work with a multitude of different retailers and marketplaces, are widely accepted by retailer systems, and provide credibility to the brand. With quick changes due to the pandemic, such as stores becoming fulfillment centers or brands flipping to an all e-commerce or direct-to-consumer operation, unique product identification and standardized data will continue to be critical to keeping new sales opportunities alive.

Choosing Inventory Visibility Over Safety Stock

The retail industry will look to increase effective inventory visibility technology such as radio frequency identification (RFID), not only to enhance efficiency but to cut back on a reliance of safety stock. Managing inventory is going to be thought of differently moving forward. Some large brands are already backing away from seasonal stocking and storing away excess inventory for next year.

Companies that implement RFID at the item level are more confident in what they have in stock to sell and fulfill. RFID is so exact that it allows for single-unit SKU sales, also known as “last item” selling. RFID captures all inventory in-store and online. This helps a retailer maximize full price sales opportunities and reduce markdowns. Plus, with reduced workforces, the increased automation can help physically locate items in a store or distribution center.

As the crisis continues to unfold, simply having options is a major plus. Athletic wear retailer Lululemon recently stated that its investments in RFID inventory tracking will enable a more flexible e-commerce fulfillment model and allow them to proactively manage inventory through the extended period of social distancing.

Growing Focus On Transparency And Sustainability

Experts predict that the pandemic will enhance consumers’ sense of global awareness and shared responsibility. Consumers will become even more conscious of a product’s origins and makeup. Retailers and brands should prepare for the expectation of complete product provenance, as well as heightened consumer interest in sustainable products.

The consistent identification of raw materials will be a key first step for the retail industry to step up its transparency capabilities. Members of the GS1 US Apparel and General Merchandise Initiative recently developed a “Best Practice Guideline for Exchanging Raw Material Attributes” that offers a common vocabulary for defining raw material attributes. It helps supply chain partners categorize like-kind materials using a common set of definitions which will contribute to streamlined sourcing decisions, clearer purchasing specifications, and better support for consumer-facing transparency initiatives.

While COVID-19 will continue to impact bottom lines and our daily lives, it’s important to keep in mind that there are opportunities to win consumer loyalty during this uncertain time. Standards-based collaboration is increasingly critical in this new reality, as it allows for greater agility to support new consumer-focused strategies both in the short and long term.

SusanAbout The Author

Susan Pichoff is Senior Director, Community Engagement at GS1 US.