Impact of Supply Chain and Inflation on Fashion Retail Industry

Interesting times indeed. We are witnessing unprecedented events, the likes of which I’ve not seen in my three decades in retail. First, the global supply chain challenges recked havoc and stalled pent-up customer demand just as we were coming out of the pandemic. Then the war in Ukraine led to shortages from gas to food supply, accelerating prices and inflation skyrocketing.

Your Open to Buy plans created at the beginning of the year was already in disarray due to supply chain issues. Now many retailers are dealing with the flood gate of backed-up products. All of these issues have rendered your merchandise plans irrelevant.

Managing a retail business during these volatile times of uncertainty can seem daunting. So how do you plan your business in this unpredictable climate?

Here are three strategies to help your planning and buying team cope and even thrive:

Replan for merchandise category shifts.

Analyze merchandise category shifts by examining current realities, and your original plan, and proactively replan. Assess your risk and reduce product categories with vulnerable supply chain risks. For example, it’s easy to plan the most fabulous new Nike shoe sales, but your sales will be zero if you can’t get the shoe in your stores. Accurate Retail analytics can help you do this without having to mine voluminous data from different sources.

Plan now to diversify your vendor dependence to mitigate your supply chain exposure. For example, you may have a higher cost with numerous vendors rather than one, but a dependable delivery will balance out.

Adjust your import vs. domestic sourcing representation, considering risk vs. margin tradeoff. Know your % of products from China and other hot spots with supply chain issues due to covid.

Examine the omnichannel impact.

Get granular, selectively. Not all your business channels have been affected the same way. Resist the temptation to apply a universal strategy across all your businesses. Your omnichannel strategy doesn’t mean treating every channel the same. Even in challenging times, there are markets where you outperform the average. The key is recognizing and leveraging those while addressing the underperforming businesses.

Be selective in your pricing and promotion strategies. Your stores in the north can absorb the late spring deliveries better than your stores in the south.

It’s more important now than ever to have a unified omnichannel strategy, but that doesn’t mean they have to be contradictory. For example, a promotional program in one channel can drive traffic in another.

See also: How do I get control over markdowns?

Promote cross-functional synergy.

Covid and working from home have reinforced teams who work in silos. Ensure your Planning and Buying teams implement your financial strategies through to buy execution

• Give teams the ability to work off the same information and execute from the same playbook
• Break down silos and promote collaboration across teams to achieve the same goal
• Instill a sense of urgency, promote agility, and remove bureaucratic roadblocks

See also: What’s your margin improvement potential?

In these challenging times, history does not provide us with the guidance needed for forecast accuracy. We must rely on the most current data and trends. Listen intently, and be willing to adjust course – quickly.

Investment in technology that enables you to do these things will be your best return on investment. It is critical to your survival.