In the fast-paced world of retail, supply chains are increasingly being recognized as value-creating differentiators for organizations as opposed to just another operational expense. As digitalization fuels a shift in how a supply chain’s capabilities are perceived, a common question executives ask themselves is ‘what’s next?’ Bastian Kuhn, Strategic Account Executive at Shippeo, and Rob Schuurbiers, CEO at Simacan, share their insights on four key trends that every executive in the retail sector needs to be aware of in 2022.
Trend #1: E-commerce volume acceleration and evolving distribution models
Our customers report that consumer behaviors are changing, with the pandemic accelerating e-commerce sales within the food and non-food FMCG categories. According to a McKinsey study, e-commerce has grown between 2 and 5 times faster than before the pandemic.
We’ve heard figures in this range in talks with customers and prospects from the retail and FMCG sectors, who have often found themselves needing to accelerate the shift from more traditional business models. Plus, the projected change in e-commerce sales from 2021 to 2022 is also remarkable. New distribution centers are also built in record time to accommodate this trend.
It’s also worth noting that, in some cases, the teams implementing and handling these new processes increasingly belong to other business units, instead of the traditional supply chain teams you would have expected. We’re sometimes finding ourselves working with completely different people within our customer organizations compared to who we worked with to set up inbound tracking, for example, in the past.
Another study from Deloitte says that Post-pandemic shoppers say they plan to use click and collect up to 1.5 times more often compared to pre-pandemic levels.
In 2021, start-ups in the food technology industry raised a record €1.8B in funding, a clear signal that there is appetite for innovation in this space and a willingness to invest heavily in it. Companies like Picnic, with offices in Amsterdam and Düsseldorf, are disrupting how customers buy essential daily products. Venture capitalists have invested billions in fast grocery delivery services, such as Germany's Gorillas, in a race to expand across Europe to meet soaring demand triggered by Covid lockdowns.
Another outcome, related to this trend, is the rise in dark stores to help organizations deliver on the promise of quick deliveries. However they face several challenges, relating to not only infrastructure, but also regulation. Cities are increasingly taking action against the rapid spread of dark stores. In January 2022, major cities like Paris decided to introduce a cap on dark store numbers, a trend also gaining momentum across the UK, Benelux and Central European regions. Residents and authorities in residential areas are complaining about the constant disruption and traffic hazards of delivery personnel zipping in and out of these distribution hubs on scooters, as well as replenishment deliveries, at all hours of the day. Amsterdam and Rotterdam have reacted by slapping a one-year freeze on new dark stores.
This is not just the food supply industry being disrupted, like in the Picnic example. This is local delivery in general experiencing pushback, as other companies like Uber did when entering new markets. The trend is introducing new competition for traditional stores and complexifying overall supply chains with a greater number of more fragmented deliveries, with an increasing reliance on smooth collaboration between the first and last mile, which as we’ll discuss later requires shared access to real-time data.
All of these factors strain the capacity of networks to deliver. These capacity shortages have made greater transparency throughout the supply chain, particularly throughout transport and logistics operations, increasingly valuable in helping to ensure customer promises can be met. Transparency is no longer ‘just’ a competitive advantage, it’s now a must-have capability.