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Coronavirus requires increased speed and agility in the retail supply chain

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A major study from the University of Warwick has provided insights into how retailers have responded to COVID-19 crisis, highlighting a need for human intervention with existing processes unable to keep up with changes in the markets.

The research, conducted by the university in partnership with Blue Yonder, concludes that, going forward, future systems will need to be more robust and responsive, to increase speed and agility in the supply chain.

The pandemic means both online and physical retailers have experienced a combination of unprecedented demand for some particular products, whilst no demand for others. Many stores have been forced to close, or adapt their operations to accommodate social distancing. Where possible, there has been a shift to online shopping, but this is not always possible and presents its own operational challenges.

The study gathered insights from 105 different retailers from Europe, Asia and the Americas who offered a glimpse into their survival and navigation of the COVID-19 crisis. The study found that:

  • The majority (61%) of retailers used inventory to buffer against the disruption of COVID-19. Supply chain processes and systems were effective, but more than half (58%) of retailers said a high degree of manual intervention was required to respond to the fluctuation in demand and supply.
  • Workforce issues were dominant issues for retailers with 59% of warehouse and 48% store operatives being affected by quarantine or illness. This often resulted in the closure of online operations and the need to recruit temporary staff.
  • Retailers were polarised in their treatment of supplier payments, with 37% delaying payments and 30% making early payments.

The survey was administered on-line by Qualtrics in late April 2020. It was targeted at senior executives in retail supply chains, in Europe, Asia and the Americas. 105 responses were received with relatively equal distribution across the regions.

Jan Godsell, Professor of Operations and Supply Chain Strategy at WMG, University of Warwick, said: “Using inventory to buffer against the disruption of COVID-19 was the most common strategy deployed by retailers. This provides the greatest certainty of supply but comes at a cost. In contrast, only just over a quarter (29%) of retailers relied on suppliers with more agile manufacturing and distribution networks, which is a potentially more resource efficient and resilient response.

“With 75 to 80% of products seeing a demand fluctuation, retailers were slightly better at responding to decreases rather than increases in demand. Whilst retailers found that their supply chain processes and systems to be effective in responding to the demand fluctuations, many were still dependent on the human touch.

“From warehouse and store operatives being affected by quarantine or illness to an over-dependence on human intervention within supply chain planning, COVID-19 has highlighted the human vulnerabilities across retail supply chains.”

Wayne Snyder, Vice President Retail Strategy, EMEA at Blue Yonder, added: “Early indications in Asia show that customers have been most supportive of those retailers they deemed to have responded best to the crisis and we’d expect that pattern to follow across Europe and the US. A critical learning for retailers is the need to invest in creating supply chains with greater flexibility, visibility and automation. Here technologies such as artificial intelligence and machine learning will play a key role in helping retailers navigate future disruption, whilst still meeting customers’ expectations.”


Conscious Choices: Why Recommerce in Luxury Fashion is Here to Stay

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By Philip Hall, Managing Director of Europe, CommerceHub

The rise of clothing recommerce (“resale commerce”— the process of selling previously-owned clothing items) speaks to what today’s consumers want: the ability to break free of fashion’s traditional seasonal cycle and access products from high-quality brands at lower prices.

Luxury retailers and marketplaces have been making serious moves to cater to consumers in search of affordable luxury items. The collaborations Selfridges launched last year, including the Depop popup which showcased a rotating selection of second-hand items on a moving rail display, complemented by talks hosted by Depop sellers gave their customers access to more selection and hard-to-find items.

Selfridges also hosts Vestiaire Collective’s only permanent physical space in the Oxford Street store; where shoppers can pick up designer second-hand garments and clear some space in their wardrobe at their dedicated resale point. And, luxury marketplace Farfetch teamed up with Thrift+, an online service that sells donated designer and high street items on consumer’s behalf in exchange for credit and a charity donation of their choice.

With the second-hand luxury market reaching  7% of personal luxury market value and growing 12% per year, compared to 3% growth in the total luxury market, you can’t ignore the potential impact this opportunity opens up for retailers looking for ways to stay relevant and compete effectively.

BCG’s 2019 True – Luxury Global Consumer Insight Report surveyed 12,000 luxury consumers in 10 countries and found that out of true-luxury consumers, 34% sell second-hand products, while 26% buy second-hand. This is largely fuelled by digital platforms which make it easier than ever to access a large range of styles on online marketplaces, such as (Hardly Ever Wore It), Vide Dressing and Vestiaire Collective. They also offer authenticity guarantees with garments often inspected by experts before the buyer parts with their money.

An unstoppable, generational trend 

Younger shoppers are driving this trend, especially Gen Z. Many Gen Z members are motivated to make more conscious purchase decisions driven in large part by their desire for quality over quantity and their concerns over the environmental impacts of fast-fashion. In fact, 74% of 18-29-year-olds prefer to purchase from sustainable brands. One in three Gen Z consumers are expected to buy second-hand this year alone, proof this trend has staying power. Globally, 64% of Gen Z and Millennial luxury consumers said sustainability influenced their purchasing behaviour, compared with 46% baby boomers and just 37% of the silver generation. Looking at the broader second-hand market, the younger consumers are certainly leading the way, with Gen Z adopting it faster than any other age group. 

A good example of a brand that is taking sustainability responsibilities seriously is London-based Front Row. Inspired by the success of US Rent the Runway, which tackles a host of sustainability initiatives, including renting, reselling and donating,  Front Row has followed in their footsteps and customers are loving it. Consumers are inclined to use services like this for two reasons. Firstly, they’re trying to remain conscious of their impact on the environment; this is a way to reduce that effect while acquiring less new things. Secondly, they aspire to higher end, luxury goods yet require a more affordable price point.

How resale boosts a retailer’s customer experience

Now is the time for UK retailers to evaluate how to take advantage of this  growing opportunity and make recommerce another vehicle to support how they compete and grow in a fast-changing retail dynamic. Making positive additions to operations by incorporating a process to either buy back unwanted garments in return for store credit, rent out higher value items or launch an upcycling campaign is proven to resonate with younger consumers whose buying power cannot be ignored.

Furthermore, continuing the lifecycle of fashion items sparks conversations and provides an opportunity to bolster a retailer’s brand experience and generate positive PR. Being seen to make genuine moves to improve a retailer’s environmental impact will improve brand loyalty of consumers and puts pressure on the whole industry to clean up its act and follow suit.

Majority of Brits ‘showrooming’ in store before buying online

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Bricks and mortar stores are losing out on over £18 billion in sales each year as consumers find products in store, before leaving and purchasing online.

That’s according to a RetailChoice study, which says nearly three-quarters (74%) of Brits admit to browsing a product in store before purchasing online, with High-Street stores have a fight on their hands to convert ‘showrooming’ consumers into  sales.

While one third (32%) of us are showrooming once a month, one in ten (12%) of us are doing so once a week. With the average consumer having spent £467 through showrooming in the last year and over half (53%) stating they enjoy browsing products instore, even with no intention to buy, there’s clearly lots to be gained by retailers who can encourage those potential buyers to make instore purchases.

Unsurprisingly, purchasing behaviours change between products as consumers feel the need to go instore for furniture (41%), scented products (40%) and jewellery (39%), whereas electronics (38%) and home appliances (32%) are usually bought online.

In order to best address and serve these inter-changing behaviours, RetailChoice says retailers need to understand how to maximise and utilise staff, instore experiences and initiatives to generate and maximise sales.

Despite the top ask from consumers to retail staff being for them not to be pushy (48%), Retail Choice’s research has revealed that, generally, consumers not only value retail staff but want more from them. Consumers value face to face interactions with store staff, with over half of Brits (57%) more likely to spend money in a store if staff are friendly and approachable.

However, shoppers would also like retail staff to have knowledge of the products available (42%) and a willingness to listen (28%).

Oliver Wren at RetailChoice said: “The Christmas period is arguably the most important time of the year for UK retailers, so it’s essential that stores are able to convert as many browsing customers into happy purchasers as possible. Despite everything we hear about the ‘death of the high street’, bricks and mortar stores have a winning card to play – their workforces – who are championed by British consumers.

What’s more, 51% of shoppers are more likely to spend instore if staff are passionate and knowledgeable. Making sure that staff are well trained and confident in talking to customers about the products available to purchase in store will help bricks and mortar stores to better meet the demands of shoppers who may well be inundated with the number of products now available instore and online.”

Andrew Goodacre, CEO of the British Independent Retailers Association, said: “Independent retailers are incredibly well placed to tackle the effects of showrooming. By offering a level of service that consumers can’t get anywhere else, shops can advise and support customers with their purchases, getting to know them by name and offering product suggestions most suited for them.

“Most independent retailers run their businesses because they have a passion for what they sell, they will have tried and tested the products themselves, so there is a level of trust you can expect when shopping with them. There is a misconception that bricks and mortar retailers are more expensive than online, however, they can be incredibly competitive and you have the added benefit of taking the product home there and then, without the added cost of delivery.”

One in four Brits (26%) argue that experiential offerings, such as coffee shops, events or try-before-you-buy opportunities, encourage us to shop instore. Equally over two fifths (47%) of shoppers are more likely to go in store if the window display is appealing.

Looking ahead to the upcoming Christmas period, recent RetailChoice research revealed that over half of Christmas-celebrating Brits (55%) say they will buy the majority of their Christmas gifts this year online. These tech-savvy shoppers argue that online shopping offers better convenience (58%), the option to have shopping delivered straight to their door (46%) and there being better deals to be found online (44%).

Despite this, e-commerce brands, such as Boohoo and Wayfair, have recently announced that they will launch high-street pop up shops during the festive season this year. These brands might not be far off the mark, as two-fifths of shoppers (40%) will hit the high street for most of their Christmas gifts, as 67% of in store shoppers want to see products before purchasing and 56% purchase instore so they have the product right away.

Men are leading the charge on weekly showrooming, with 17% practicing the trend at least once a week, compared to just 9% of women. Men also report spending more than women do, with the average male having showroomed to the value of £594.10 in the last year, compared to the £332.90 spent by women. This means that every pound spent by a woman equates to £1.78 spent by men.

Last year, Bloomberg reported that women drive 70-80% of all consumer purchasing, whether that’s women making more purchases or influencing someone else’s purchase. But why are women such powerful consumers?

Interestingly, men are less likely to be popping down to pop-up stores opened by typically online stores – 46% of men state they would visit on these stores, compared to 60% of women. While this may be due to 59% of women enjoy browsing products in store, even without having any intention to buy, compared to 48% of men, the top reason women cite for wanting to visit these stores are to check the quality of products before purchasing. Men, on the other hand, are on the hunt for bargains, with men most likely to visit these stores if the products were cheaper than online – potentially signposting why they’re spending more online after having spotted a product instore at a faster rate than women.

Lines blurring between human & digital retail customer service

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Capabilities that bridge the online/offline customer experience gap are set to be a key investment focus for UK retailers over the next two years.

That’s the conclusion of the latest report from iAdvize, which polled 50 senior UK retailers in its ‘Blueprint For The New Digital Store Associate In The Age Of Conversational Commerce’ report.

The findings revealed that, with 40% of UK shoppers now wanting human interaction in the online buying process*, customer service functionality that blends human and digital touchpoints made up four out of the top five investment priorities for retailers over the next 24 months.  

Almost two thirds (64%) of UK retailers plan to invest in live messaging capabilities with customer service agents – either through online messaging or chat functions. In app customer service agents (37%), social media influencers (21%) and online brand ambassadors (19%) also featured in the top five investment focuses when it came to customer service.

In the same way retailers are looking to deliver human interaction in online encounters, retail businesses also plan to use in-store staff to answer digital queries. Over half (58%) of the retail leaders polled as part of the research wanted to digitise store staff by giving them online capabilities, while two-fifths (40%) said they plan to use store associates to engage in digital conversational commerce when store footfall is light. 

Stuart Gordon, UK Country Manager at iAdvize, said: “Retailers realise that store staff need access to quality customer, stock and order insights in general, but even more so if they are going to make a valuable contribution to the online customer journey, successfully closing the customer experience gap.”

“There is a growing realisation within bricks-and-mortar retail that physical stores need to focus on what pureplays cannot do, rather than trying to compete on their home territory of price, friction-free convenience and ease of delivery.  And that means unlocking human capital to offer quality insight, delivered with ‘emotional’ human interaction,” he concluded.

You can download the full report here.