Inside Logistics

2019 Outlook: Retail

Big Data serves the big


December 20, 2018
by Kara Kuryllowicz

(Photo: iStock)

Uncertainty is in the Canadian air as 2018 comes to a close. Questions about trade deals, interest rates, housing values, oil prices and the GM plant closure are all weighing on the collective mind as we close out what has been a strong year.

Economists say we should expect further growth in 2019, in spite of an overall gloomy outlook for world economies. In fact, the OECD revised Canada’s GDP growth outlook for 2019 upwards in a November update.

Of course, a lot of our economic success is predicated on factors beyond the control of our own businesses, like politics south of the border, trade deals and wars, interest rates and oil prices. And with that knowledge business continues, dealing with many familiar challenges.

To get some insight into how several of Canada’s key sectors are faring, freelance writer Kara Kuryllowicz spoke with business leaders and asked them about the challenges they see for 2019. Here’s what she found out.

The rapidly-evolving retail sector’s fundamental, consumer-focused guiding principles will continue to challenge supply chains in 2019 and beyond. As always, consumer satisfaction depends on competitively priced, quality products. But more than ever, consumers are now willing to look beyond the traditional retailers and tried-and-true delivery methods.

“Retailers will be assessing their supply chains to cut costs and maximize availability in 2019, because they’re fully aware that consumers have lots of choices online and in bricks-and-mortar, and those supply chain costs are going to be critical to pricing,” says David Johnston, director of the York University Schulich School of Business’s new Master of Supply Chain Management Program which launches in May 2019.

Consumers expect on-time, complete orders in perfect condition and consider a store visit a waste of their precious time. It’s perfectly legitimate to switch retailers if the products they seek are out-of-stock or turn out to be available only online.

“Consumers know that if they can’t get what they want from you, there are plenty of other options,” says Johnston.

Increasingly, sophisticated analytics departments leverage the companies’ data to give retailers like Canadian Tire a competitive edge. Current technology provides an incredible range of highly detailed, real-time data, but it’s meaningless unless retailers and their analysts understand and act on it. Better-informed retailers make more timely business decisions that satisfy their CFOs and stakeholders as well as consumers’ demands for product quality, price and availability.

Analysts use a range of tools to leverage data and match supply to demand in order to maximize sales and minimize the cut-rate pricing that moves product off retail shelves and out of expensive warehouse and DC space. Retailers that ignore or mishandle data are giving their competitors the opportunity to outperform them.

“The major retailers have the scale and budget to support and justify analytics departments and leading-edge tools, but many of the small to mid-size retailers still depend on that ‘killer app’ – the Excel spreadsheet,” Johnston says. “Small- to mid-size retailers often have to put all of their efforts into selling, purchasing and shipping, and lack the resources required to focus on collecting and mining their data for opportunities.”

Increasingly, retailers also rely on data to determine which suppliers offer the best long-term service, beyond price and availability. For example, they’ll consider data that supports their abilities to manage risk to avoid disruptions to supply, product failure and socially unacceptable practices such as poor health and safety or environmental practices.

“The large retailers have the power to ask for whatever they want – it’s behind every business case they make and the data helps technology-savvy copmanies understand, manage and control their suppliers,” says Johnston.

That data matters as much to the retailers’ suppliers, many of which have been relying on collaborative partnerships that respect privacy, security and confidentiality to know what’s selling and to plan their production and deliveries.

A lean supply chain is efficient and cost-effective but as importantly in a volatile world, retailers must be agile. Natural disasters, trade deals, currency fluctuations and politics can all affect retailers’ most trusted sources with little to no advance notice, which means that without alternative arrangements they could lose certain consumers forever.

The bottom line still rules, but it has broadened as retailers are expected to do right by the planet, its communities and its people. The news cycle is the shortest it has ever been and social media instantly and widely shares information retailers most want to keep quiet.

“Transparency is the retailer’s right because no one wants to see their private label on a shirt protruding from the rubble of a building that just collapsed due to negligent health and safety practices,” says Johnston.

“Retailers need to know that their suppliers are up to their consumers’ ethical and sustainability standards.”