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Regular Industry Development Updates, Opinions and Talking Points relating to Manufacturing, the Supply Chain and Logistics.

In the future, retail is all about embracing "temporary"

24-Jan-2018
In the future, retail is all about embracing
There’s nothing quite like the holiday season in retail. The last few months of the year carry so much weight that, when the dust settles in January, we all have to collectively catch our breaths and remember there’s a whole new year of challenges and opportunities ahead.

One word that seemed to dominate 2017 in retail, was apocalypse. As in, “the Retail Apocalypse is upon on us!” Between a record number of store closures and a handful of big bankruptcies, retailers were clearly going the way of the dodo.

High streets resembled ghost towns, brick-and-mortar stores no longer had a place in our shopping experience, and all future transactions would be done via smartphone.

It all made for good headlines and horror stories, but as it turned out, news of retail’s demise was greatly exaggerated. Holiday sales grew nearly 5% over the previous year, and while some retailers didn’t make it out of 2017, there is renewed optimism that the market will continue to grow.

The last chapter of this book has yet to be written. But what does the next chapter—the one for 2018—look like? In a word - “temporary.” Coming off the holiday season we have already seen retailers lean hard on seasonal, temporary labour, brought in to complement the existing workforce to deal with the increase seasonal business.

The issues of seasonality will not go away. The Thanksgiving through Christmas shopping season will be back in 2018 around the third Thursday in November. Of course, there will also be other events that drive seasonal behaviours – back to school, Valentine’s Day, Mother’s Day and so on.

There will be a need to add labour, investment and capacity to deal with that seasonal surge, whether in store, at the distribution centre, or for logistics.

And the notion of temporary fits a lot of modern retail elsewhere. We are witnessing more and more retail leaning on pop up stores to give themselves a physical presence without making the long-term investments in real estate.

We are already seeing large brands such as Adidas, Toys R Us, and Yankee Candle as well as new comers like Ministry of Supply leaning on the temporary brick-and-mortar stores. These temporary store fronts allow retailers and brands to experiment with store lay outs, inventory mix, and locations. The pop up store can have laser focused inventory which matches up with seasonal drivers.

Faster inventory turnover is critical for these temporary shops to succeed. For example, retailers like Zara are disrupting the industry by changing the notion of seasons. Rather than focusing on four seasons, new collections are focused on weeks rather than months. But with these quicker fashion cycles, there is greater pressure on getting the mix of product right. At the same point, if you make a mistake you can recover sooner, since the next round is coming in quickly.

Retailers must learn and adjust faster and with greater speed than before. This notion of fast moving, temporary, inventory will become the norm. Brands and retailers must have a mindset focused on creating inventory in smaller and more nimble batches.

Retailers and brands need to embrace the term “temporary.” The idea of being built to last is passé. Consumers attention spans have shrunk and their expectations have grown. Our desire for the latest and greatest is only increasing. And our willingness to discard inventory for the latest models is the norm.

This plays well for the retailers and brands that have a savvy supply chain network, a network that allows them to be flexible, to understand the pace at which retail is moving. And embrace it.

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