Mark Hughes, Regional VP, UK & Ireland at Epicor, speaks on how furniture retailers might respond to the current challenging business environment. 

The global supply chain crisis has created an extremely difficult environment for any business that relies on getting physical products delivered quickly to customers, especially internationally. In our post-Covid economy, supply chains have become increasingly fragile and vulnerable to disruption, as the cost of transportation, especially road haulage and shipping, continues to rise dramatically due to spiralling labour costs and the price of fuel.

The sentiment of business leaders is expressed in a recent Gartner survey, in which 68% of supply chain executives report they have been constantly responding to high-impact disruptions over the last three years, with most not having the time to recover before the next disruptive event. This is prompting many to rethink how they can balance profit margins with the fast-changing demands of consumers in an increasingly competitive global economy.

Alongside this, the rapid rise of eCommerce is placing more demands on retailers, as consumers now expect immediate fulfilment, at a time when this is becoming increasingly difficult to ensure. The challenge facing many businesses today is how they can get items to customers in the most cost-effective and efficient way possible.

According to the latest CPI figures released by the ONS, the largest upward contributions for the change in inflation between December 2021 and January 2022 are from furniture and household goods, clothing and footwear, and housing or household services. Furniture prices have also risen 13% since 2015, and this is affecting big retail brands including IKEA, ScS and DFS.

These retailers are having to modify their supply chain strategies for the delivery of large items like furniture or white goods. One approach many are starting to consider is to have the product physically assembled locally at the point of consumption. This means that a set of component parts can be delivered to a depot near where the customer is based at a reduced cost so that the parts can be quickly put together and scheduled for delivery. Money saved on delivery and fuel will negate the added costs of local labour making the process more sustainable. Equally with the rise in container costs, there is a greater need to ensure shipping containers are loaded to maximum capacity.

Although there is a lot of pressure to modernise their item delivery strategies to meet new expectations, retailers can take advantage of sophisticated technology solutions for support. For example, being able to accurately track products and parts across each stage of the supply chain in real-time is invaluable when developing new delivery processes. This also provides greater visibility for stock management, so retailers can easily identify problems or areas for improvement.

Despite the challenges facing the retail sector today, brands can use the opportunity that onshoring, near-shoring and supply chain re-engineering present to build brand equity and consumer trust. Businesses that successfully modernise their supply chain processes will be able provide a much more satisfying customer experience, while simultaneously reducing their carbon footprint and becoming more sustainable, which is now being demanded by consumers and shareholders alike.