The Implications of COVID-19 for the Future of the Retail Supply Chain

The Implications of COVID-19 for the Future of the Retail Supply Chain

This IDC Perspective takes a look at the continuing impact of COVID-19 — and the potential for other global disruptions — on retail supply chains and its implications for 2021 and beyond.The year 2020 was challenging for global supply chains. The supply shock that started in China early in the year and the demand shock that followed it as large swaths of the global economy shut down exposed vulnerabilities as well as resiliencies in supply chains around the world. Retailers faced supply and demand disruptions, navigating inventory held up in factories, global lockdowns, evolving trade policies, and surges related to hoarding behaviors for essential items such as toilet paper. They were confronted with accelerating ecommerce and rising demand for safe shopping, transparency, and omni-channel fulfillment. And they faced massive economic shifts resulting from high unemployment and shifting shopping patterns, including the massive losses in shopping resulting not just from changes in quotidian habits but also from decreased travel activity."You might expect a major 'black swan' event like the pandemic, which has curtailed consumer spending and created so much havoc in its wake, to lead companies to batten down the hatches and rein in IT spending. For some retailers it certainly has, but what we've seen is that for many retailers, the very opposite is true, and that COVID-19 has accelerated their supply chain transformation journeys," said Jordan K. Speer, research manager, IDC's Global Supply Chain service. "We saw this immediately in terms of the quick moves by retailers to enable omni-channel fulfillment to satisfy immediate demand. But omni-channel is expensive. Now comes the work of enabling greater visibility, connectedness, and automation across the end-to-end supply chain to speed product to market and manage that in a way that pleases the customer while also being profitable for the retailer."

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