Reflecting on the challenges faced by the retail industry

This post first featured in ‘The Essential Guide to Fulfilment – Are Your Logistics Future Fit?’ published in association with PHL. To read the full ebook click here, or scroll to the end of the page to view on page-turning software.

2020 has seen countless challenges emerge for retailers, creating somewhat of a survival of the fittest mentality. An overarching theme has been uncertainty, with difficulties arising throughout the fulfilment journey. From COVID-19 to Brexit and the UK officially going into recession, businesses are having to continuously adapt, leaving many retailers asking “what happens next?”

While we are certainly not out of the woods yet, there are many lessons to be learned from recent events, as well as opportunities to be found.

COVID-19

It goes without saying that COVID-19 has had a drastic impact on everybody in the retail sector. Businesses have had to completely rethink their strategies, adapting to the ‘new normal’ whilst battling to survive in a challenging climate.

The initial closure of retail stores at the beginning of lockdown sparked an unprecedented rise of ecommerce. However, this was also coupled with supply problems as manufacturers and warehouses were forced to close down and work at reduced capacity. Deliveries were delayed and the combination of increased demand and reduced capacity caused difficulties throughout the sector.

Even after re-opening, facilities such as warehouses have had to put social distancing measures in place. These changes have seen some warehouses return to full functionality, while others have struggled to get orders out on time.

Recent months have seen retailers face continuous uncertainty. Despite the re-opening of physical stores, many have had to close their doors for good, with the ongoing threat of a second wave and future lockdowns presenting challenges throughout the industry.

Brexit

Brexit has meant that it won’t be as easy or straightforward for retailers to get stock in and out of Europe anymore, so having somebody that knows how to import and export is essential. This has placed another strain on retailers that are already struggling to adjust to the rapidly changing retail landscape. Retailers have been partnering with fulfilment companies to tap into their expertise and simplify the process, with many being able to negotiate good prices for shipping and understand other factors, such as pallet size requirements for different transport countries.

Due to Brexit, Fulfilment by Amazon (FBA) also stopped retailers having their goods sent from any of Amazon’s UK fulfilment centres to fulfil orders in Europe. What this meant was that from the 1st January 2020, those using FBA in the UK went from having a sales opportunity of 446 million shoppers in the EU, to a dramatically reduced 66 million in Britain. The only way retailers could still deliver to Europe through FBA was to send part of their stock to a European-based warehouse, meaning higher inventory holding and additional costs. This change has meant that an increasing number of retailers are benefiting from outsourcing their fulfilment to experienced businesses.

Shrinking economy

The UK economy experienced its biggest drop on record between April and June as the country officially fell into recession. During this period, the economy shrank an enormous 20.4% in comparison to the first three months of 2020.

This has meant that even industries that have boomed throughout lockdown and beyond are being impacted, with redundancies becoming more common and businesses looking to protect themselves in the months to come.

Changing consumer attitudes

Shopping habits are changing, with an increase in demand for ecommerce. The rapid adoption of online shopping has meant that retailers have been required to increase their online presence and adapt their fulfilment strategies in a hurry.

It now looks as though this trend is here to stay, with ecommerce popularity being expected to remain, meaning retailers are now able to spend money fine-tuning their fulfilment strategies in ways that enable them to scale up and down as required.

Recent months have also seen consumers become more understanding of longer waiting times. Instead, the focus has been shifted towards communication, with customers valuing shipping updates amidst unforeseen circumstances.

These changing consumer attitudes have meant that retailers now require more visibility throughout the fulfilment process, being able to update customers on expected delivery dates, while using this as a channel to deliver a great customer experience.

What happens next?

The good news is that there is light at the end of the tunnel. Many of these challenges are now known and understood, becoming more of an opportunity for those that are able to make the most of the current climate.

Retailers need to forge new partnerships to overcome challenges, adapt swiftly and succeed. The need to be agile has never been greater, with the likes of COVID-19, Brexit and a recession bringing unprecedented challenges.

With social distancing measures expected to remain in place for the foreseeable future and consumers enjoying their newfound love of ecommerce, it’s expected that fulfilment will continue to play a larger role in the world of retail.

A large part of surviving the coming months and years comes down to future-proofing your business. Now is the perfect time to join forces with a fulfilment company, working to overcome these challenges to succeed, at a time where communication and collaboration are vital. By doing this, retailers can tap into expert knowledge, focusing on the retail side of business while allowing fulfilment experts to do what they do best.

Growing the fulfilment side of your business creates opportunities for improvement and return on investment. While retailers may be under increasing pressure to survive the coming months, this doesn’t have to be a stressful time. Instead, outsourcing fulfilment enables retailers to tap into experts’ knowledge, streamlining processes while building customer loyalty. If you’re unsure about the impact of any of the current challenges faced in the industry, it is worth speaking to specialist fulfilment providers about what you need to be doing.

To summarise, retailers are able to benefit enormously from working with trusted, reliable fulfilment partners. Helping to guide retailers through these uncertain times, these partnerships can take the pressure off retailers while helping them to successfully navigate the rapidly evolving industry and deliver a first-class service for customers.

If you would like to know more about how talking to Fulfilment and Logistics experts like PHL can help grow your business through the current retail challenges, then please feel free to get in contact now laurap@thephlgroup.co.uk