Icertis senior director for retail industry solutions, Phillip Barry has shared three predictions for 2022 as supply chain issues continue to put pressure on the retail sector.
The race to find new suppliers and products will challenge retailers and potentially increase risk.
At times, retailers won’t even create contracts because they’re in such a rush – and that opens them up to a lot of risk, including having subpar quality on the shelves or supplier issues, according to Barry.
“This could adversely impact the retailer’s brand long-term. Right now, there’s so much pressure to find product that many retailers are not thinking about the risk. But that’s why contracts are so critical – to make sure retailers are protecting their brands,” he said.
Product shortages and price increases will escalate the decline in consumer loyalty.
Consumer loyalty has declined in part because of limited product availability. People can’t be loyal when they don’t have a choice in what they’re buying, because often there’s only Product A on the shelf, Barry said.
“Retailers and CPG brands must ask themselves how much they should spend on marketing, while also making sure they have the product available to sell. If retailers promote certain SKUs and don’t have them available for purchase, it’s not only going to kill the ROI on ad spend but also upset customers and decrease loyalty, driving them to shop with competing merchants.”
Both CPG brands and retailers are scrambling to find new sources and suppliers.
The industry has had to grapple with significant challenges because of the pandemic, most recently supply chain disruption.
“In turn, we see retailers rushing to get access to products and suppliers this holiday season. When consumers walk into a store, they’re not seeing a lot of product availability. This will challenge brands and CPGs to look for more sources and new manufacturers of products. They will need to find new suppliers immediately – and to do that, it will be critical for them to expedite every part of the process, including contracts,” Barry said.