Spurred on by unpredictable market trends, changing customer behaviours, and the rise of e-commerce, businesses are having to redefine their operations.
One industry in particular feeling the weight of this change is retail.
Research from the PwC Global Consumer Insights Survey shows that 28% of South African in-store shoppers are bothered by stock shortages while 30% of online shoppers take issue with product availability.
It has therefore become critical for retailers to use an agile and responsive supply chain to stay competitive.
“Agility and responsiveness provide two ways to manage inventory. In a world that has become more unpredictable, complex, and ambiguous, being able to respond to unexpected changes is critical for success,” said Jasper Zeelenberg, founder of Retailisation, which delivers supply chain synchronisation via a combination of software and consultancy.
The company uses digital twin technology and proprietary algorithms to detect and remove constraints to flow and sustain profitable supply chain decisions that are injected into the customer’s execution systems via a (SaaS) subscription model.
Zeelenberg stresses that today’s retail is less about prediction and more about rapid response to shifts in supply and demand.
This shift is even more prominent in South Africa due to factors such as load shedding and the rapid changes in consumer trends driven by social media.
Peter Ludi, MD of Solutions at redPanda Software, points out that South African consumer buying behaviour has changed over the past decade.
“Consumers used to be very brand loyal. Now, they shop for specific categories at specific retailers,” he said.
This shift, coupled with the increased blending of online and in-store shopping behaviours, means retailers worldwide are struggling to adapt.
The challenge of overproduction
Despite being in a period of change and uncertainty, the retail sector continues to produce 40% more than what supply chains consume, leading to significant waste.
“We need a more holistic metric to manage this process efficiently. Retailers need to respond properly and in time to avoid this generation of waste,” Zeelenberg emphasised.
Ludi agrees, noting that a circular economy can also potentially create opportunities for cross-vertical industries, such as repurposing bicycle seats into suitcases.
He highlights that the diverse nature of South Africa’s market, characterised by large territory sizes and complex infrastructure, can be leveraged for such innovative approaches.
Capitalising on market opportunities
Both Zeelenberg and Ludi believe that businesses can still find opportunities.
As an example, Ludi mentions petrol stations with convenience stores that are taking the market from more conventional retailers by targeting time-restricted customers on their way home.
He said, “Petrol stations have generators, unlike many other convenience stores. This is an opportunity for one retailer to take from another if they maintain stock levels and be as responsive as possible to the ecosystem of challenges.”
Improving responsiveness
With the shift from supply-focused to demand-driven retail, advanced technology can play a crucial role in improving responsiveness.
Zeelenberg explains that simulations and digital twins can help retailers visualise the impact of potential changes before they are implemented.
“This is a new way of validating changes,” he said.
Ludi said, “Retailisation is a must-have. Today, everyone has order management solutions running in the background of transactional systems. Complex consumption landscapes mean that we cannot rely on basic algorithms any more.”
He said retailers must increase their ability to respond to market changes.
BUSINESS REPORT