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Industry collaboration is key to retail success in 2016

Date: January 25, 2016

Category: Opinion piece


Author: Gary Lynch

Gary Lynch CEO GS1 UKGary Lynch, CEO at GS1 UK, discusses what key retail trends to anticipate in 2016

Over the past 12 months, consumers have become more empowered than ever before, with their expectations about the buying experience continuing to grow as we move into 2016. They expect the same, seamless experience across all the channels they use for shopping – in-store (both local and out-of-town), mobile or online. Consumers expect consistent and accurate product information and of course the availability to be the same across all these channels.

In fact, product availability was a key driver of consumer spend last year – if the product wasn’t available from one retailer then the consumer would simply try another. This has meant retailers have needed to invest in the development of their supply chains more than ever – and at a time when they are facing massive competitive cost pressures, from online retailers like Amazon, and of course the discounters like Lidl and Aldi. By ensuring consumers get the products they want, where and when they want them, retailers can protect and even increase brand affinity and therefore sales across their customer base.

In 2015 we’ve been working with key industry players to understand where and how they can collaborate on the supply chain operations. They all agree that having one unified way of working with their suppliers can help everyone reduce costs and increase efficiencies -– from the point of manufacture through to the consumer.

In 2016 we’ll see the retail industry collaborate more than ever before – by engaging in new forms of working together in order to provide better service. A clear example of this is our perfect order initiative – which looks at the order-to-cash process and aims to deliver greater trust and confidence through improved and standardised end-to-end supply chain processes. With this, retailers are able to provide the seamless shopping experience that consumers increasingly expect.

One of the main trends we’re seeing now, which of course will continue in 2016, is that online is driving everything – and it drives how retailers serve their customers. And because of this, the industry is recognising the need to focus their efforts on improving their speed, cost and flexibility in delivery – because by doing this successfully, profitably and increasingly collaboratively, is what will start setting apart the front-runners.

With online shopping continuing to grow rapidly, the supply chain is also increasingly becoming more complex. The upside to this is that retailer and brand owners now have multiple options to serve their customers – but the downside is that it introduces further complexity to successfully fulfilling consumers’ demands. And more online shopping means more returns – another enormous cost that the industry is increasingly building in to the overall cost-to-serve model. A better and more rational understanding of the true cost-to-serve of each channel involved, and the complexities they add, is crucial.

During the next 12 months, mobile shopping through tablets and smart phones will of course increase – meaning retailers will have to meet the ever increasing customer demands to shop ‘on-the-go’. I expect to see more click & collect schemes expanding with ever more pick-up locations available for consumers – such as lockers in convenience stores and also at busy places like stations. This is attractive for both retailers and consumers as it can bring down the cost for the first and expand the channels available for the latter.

And of course in the grocery market, there is the looming prospect of Amazon extending its online offerings to fresh foods across the UK.

Overall it’s safe to say that 2016 will be another massively challenging and disruptive year for the retail industry. Collaboration – in the right areas – will be more important than ever before. By working together retailers and suppliers can reduce the cost-to-serve and provide a better shopping experience. We, at GS1 UK, will continue to facilitate this collaboration.

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