The retail supply chain has shifted from physical stores to online channels as nonessential businesses have closed and Americans self-isolate under stay-at-home orders. To prepare for long periods at home, consumers have stocked up on products such as medicine, cleaning supplies, toilet paper, and grocery staples.
A buying frenzy on some items and a drop in demand for others have disrupted retail supply chains. According to a Gartner report, a shift in consumer buying habits and temporary store closures in some markets have some nonessential retailers (luxury goods and apparel, for instance) rethinking business operations.
“The global outbreak of COVID-19 is creating a very dynamic environment in retail supply chains,” says Thomas O’Connor, senior director analyst with the Gartner Supply Chain practice. “Demand is shifting from physical stores to online channels as consumers seek to avoid public places due to fear of infection or government restrictions.”
Keeping supply chains open
Essential businesses — such as grocery, convenience, and hardware stores — and shops that are continuing to operate as online stores should focus on maintaining close communication with existing suppliers while also developing backup alternatives.
Companies that rely on the flow of supplies or finished goods from overseas need to be prepared for sudden interruptions in the global supply chain. “Many retailers that source from China already experience challenges caused by constrained raw material as well as limited availability of goods,” notes the Gartner report.
The Gartner analysts recommend that retailers prioritize operations to meet consumer demand. That means closely monitoring fluctuations in demand and working with suppliers to ensure the availability of inventory. To prepare for potential disruptions, retailers also need to have alternative supply sources and temporary distribution facilities that can support product replenishment as needed.
In its research report “Coronavirus Alters Supply Chain Dynamics Impacting People, Products and Costs,” Gartner analysts warn that companies must adjust their supply chain strategies. “Adapt and adjust global demand and supply plans and manage customer expectations regarding product access,” advises the report.
For essential businesses, the challenge is often to maintain existing relationships, develop backup suppliers, prepare for disruptions, closely monitor existing contracts and orders, and have alternative transportation and delivery options available.
For nonessential businesses that have closed their brick-and-mortar locations but are still providing online sales, it’s important to deliver reliable and positive customer experiences, implement frictionless transaction capabilities, and work with multiple shippers for timely fulfillment. – Read more
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