US-based global professional services company Alvarez & Marsal (A&M) conducted a study on “The Shape of Retail: COVID-19 and the Future of Retail Supply Chains,” in collaboration with UK-based independent economics research consultancy, Retail Economics.
The study highlights the greater focus put by the COVID-19 crisis on the use of technology to create more robust supply chains and accelerated movements towards digital trade and eCommerce. Technological innovation and adoption will form the future of supply chains, helping to streamline activities and drive efficiencies, according to the report.
The majority of the retailers surveyed understand the need for continued investment in technology, with 77 percent considering investing in digitalization, 63 percent in automation and 23 percent in artificial intelligence (AI), and all of these improvements can produce substantial benefits with limited investment.
Dr. Saeeda Jaffar Managing Director & Head A&M – Middle East
“While the key trends largely focus on Europe, similar trends are observed in the GCC. Retailers are strengthening and stabilizing their supply chains. There is a move towards the acquisition of strategic assets to provide security of critical supply chains. For example, local investors have recently invested heavily in the food and agricultural sector, to combat supply chain disruptions which were especially heightened due to COVID-19. Simultaneously, there is a move away from heavy dependence on concentrated imports to local content and distributed sourcing and storage.”
“Furthermore, a digital transformation is inevitable, which COVID-19 has helped accelerate. We expect business models to incorporate digitization, which, will ultimately have an impact on customer interfaces and operating models, creating flexible, lean and data-driven organization,” added Dr. Saeeda Jaffar.
COVID-19 has placed new pressures on distributors, revealing vulnerabilities in global supply chains and forcing many to reconsider strategies to remain resilient for the future. About 70 percent of Europe’s 30 largest retailers say they have conducted a review of their distribution network as a direct result of the pandemic.
Erin Brookes, managing director and head of retail and consumer, Europe, A&M said, “COVID-19 has brought about a fresh set of financial and logistical challenges which retailers must overcome while accommodating permanent shifts in consumer behaviour. Our research shows that despite these new pressure points, most retailers are responding at speed, creating new growth opportunities within their domestic economies and protecting against future risk.”
“This holiday season will be a major test for this new operating environment. The structural shift towards online will place extraordinary pressure on distribution and in some cases, we are likely to see supply not meeting demand. Meanwhile, social distancing measures could place a strain on physical retail capacity. In the next few weeks, retailers will need to deliver a steady flow of sales to contain the usual last-minute rush,” she further added.
