Steve Smith, Manhattan Associates director in Europe, Middle East and Africa (EMEA), shares his perspectives and predictions on the changing environment that retailers face months ahead
Steve Smith, Manhattan Associates director in Europe, Middle East and Africa (EMEA), shares his perspectives and predictions on the changing environment that retailers face months ahead
Tight control of cost and risk
“Despite signs of a modest economic recovery in trading conditions this year, corporate cost reduction strategies from the depths of the downturn will continue throughout 2010. For retailers, procurement and the control of supply chain costs will be particularly important, along with improvements in labour management and the optimisation of inventory,” he said.
“The growing dependency of retailers on the inbound supply chain, and the complexity and risk of international sourcing will also require close management. We can expect to see retailers putting in place clear information flows, both internally and externally, to ensure that procurement and execution are coordinated to best commercial effect.”
A shift to mixed sourcing
Smith continued: “Another response to the unpredictability of the recovery is likely to be a move towards a more mixed sourcing strategy, shifting between regional and distant sourcing. The price benefits obtained from long-distance benefits are balanced against the lower inventory holding requirements that come with a reliable supply of goods from a local source.
“To make a mixed sourcing model work effectively, retailers will need fast access to detailed information about all the cost elements within the supply network. Only by understanding this will it be possible to deliver the lowest cost-to-serve, from source to consumer.”
Greater differentiation and product proliferation
“Retailers will continue to find ways to protect margins,” he added. “While some will continue the trend towards ‘range proliferation’ - offering greater availability and more choice to the customer – others will focus on fewer lines that are more profitable. Differentiation will also take the form of more creative service offerings, such as ‘buy anywhere, collect anywhere, return anywhere’, using sophisticated systems and processes to orchestrate this multi-channel offering in order to win and retain customers.”
Multichannel retailing – for sales and returns
“2010 will certainly see a further expansion of multi-channel retailing. Creative service options that allow for ordering online and collection in-store, or ordering in-kiosk at a retail outlet for home delivery are already growing in popularity. Furthermore, consumers now demand similar facilities for the return of goods and expect to be able to go to a store to return an item bought online. The challenge for retailers will be to create the right infrastructure to cope with both the inbound and outbound flow of goods via a multitude of channels without incurring huge expenses.
“Retailers face a tough year ahead as they try to balance the control of costs against the need to be ready to respond to opportunities and challenges. At the heart of this will be information – about the commercial environment and about the details of their own supply networks. Those retailers who not only have the visible data, but are able to use that data to make decisions quickly will have the greatest of business attributes: agility. And in 2010 that will make all the difference,” Smith concluded.
