Retail Supply Chain Management Trends: Past, Present and Future

Introduction

One of the main drivers of the global economy is the retail industry. The supply chain for the retail industry has become of the importance subject of study because it provides the retailers with competitive advantage. The main challenge in studying the retail supply chain (R-SCM) is that it tends to change every year. This study was conducted to understand how R-SCM has changed over last couple of years and how it will be in the near future. Study was conducted to study the factors affecting R-SCM for next 2-3 years and the challenges affecting the retailers in near future. Study doesn’t talk about too far in future as the purpose of the study is to understand and report immediate challenges of the retailers. Study has been conducted around challenges, capabilities and priorities of the retailers. The impact of recession is clearly seen on the industry. Chief executives are concerned about the economic recovery that is speeding up, and are pursuing strategies to undergo the economic challenges while grabbing the opportunities to increase efficiencies.

Figure 1.

Growth areas in developing markets - 2001 vs 2010 comparison

Data from Figure 1 shows that during 2001 to 2010, the global organized retailing space has increased by 225% with population growth of just 11%. During same time, sales from organized retail per capita have almost doubled and Internet access has grown by 500%. It’s clear from the above data that retail is growing leaps and bounds in developing markets and these developing markets has emerged to become the driving forces fueling global growth in retail sales. Hence it’s not surprising that the retailing companies are looking to expand their base in developing countries but with care. It’s important that the companies pick the right countries for their future growth. Not all developing countries offer same amount of return and most of the global retailing companies have learnt hard way. Retailing companies will have to identify the market poised for a big leap. Early country outside developed countries league to generate interest was China. Many global retailers focused their developing market expansion aspirations on China, which gained acceptance among business world because of its recognition by the World Trade Organization (WTO) in 2001. Many other countries like Southeast Asia and other BRIC nations (Brazil, Russia, India and China). With their friendly foreign policies attracted global retailers. Retailers are also exploring options in other countries like the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Rumania, Slovenia and Slovakia following their joining the European Union (EU) in 2004.

Coming back to Retail-Supply Chain Management (R-SCM), it is critical to retail success, more so in unknown territories and in global scenario of conducting business. Ultimately, it’s the supply chain that determines end consumer cost, and has a significant impact on shareholder value. One retailer shows retailer’s stock prices fell an average of 9% on the day a supply chain problem was disclosed, with an additional 9% drop recorded over 90 days.

This research, based on the retailers of every revenue size and different geographical areas, shows that the retailers had turned up to the supply chain professionals in order to experience further growth. The supply chain professionals take up the challenge as the essential role in the organization’s success. The data collected is a combination of Companies’ views expressed in their annual report and other disclosures and practical observations being carried out in the retail domain. The research goal is to be able to recognize the essential role that the supply chain management plays in the success of the retail organization in the coming 2-3 years. Our result will show the current capabilities, immediate challenges, and supply chain priorities for retail centric organizations. The retail domain faced plenty of challenges in the past years which were because of the increasing competition and the customer’s choice in low spending. The retail chain executives are finding it difficult to cope up with the high levels of service and low costs as the businesses face more global pressure. The purpose of this study is to explore the critical role SCM plays in the retail industry and study the changing landscape of R-SCM. The study addresses three key research questions:

Important components of the supply chain are (they also form part of our research study):