2017 predictions from Fowler Welch

2017 big text2016 has been anything but predictable, but as 2017 begins and the effects of 2016 start to become clearer, here are some thoughts as to what the next year could have in store.

 

Polarisation of major retailers

We’ve seen discount retailers Aldi and Lidl take away a large amount of market share from the traditional ‘big four’ in 2016 and this is likely to affect how retailers operate in the next twelve months and beyond.

A perfect storm of economic factors will affect retail prices – exchange rates and the increasing costs of energy and raw materials – combined with a competitive market with many players. The pressure felt by the retailers because of these issues is likely to be reflected across the supply chain, with businesses looking to share the pain and reduce costs wherever and whenever possible.

We expect to see a continued split between the approach of businesses; those that look purely to trade at the lowest price possible, and those who look to collaborate and find solutions that add value through the lowest total cost. In a landscape where one and two percent margins are being fought over, a collaborative culture is more likely to reap steady long-term financial benefits rather than simply battling to drive prices down.

In terms of promotional activity, the consumer should expect to see consistently low prices rather than volume being driven through promotional offers. This will see some supply chain simplification as a result of fewer peaks and troughs.

 

Technology at the forefront?

Technological advancements were rife in 2016, with many big retailers introducing shorter delivery times and Amazon disrupting the retail sector, specifically grocery, with its new launches (Amazon Fresh in the UK and Amazon Go and Dash button in the US). There is no doubt that this will continue throughout 2017, but that doesn’t mean the focus for the supply chain should be limited to servicing the tech savvy consumer.

My prediction is that we’ll see a greater polarisation between the tech savvy shopper who will drive more volatility and the core shoppers who continue to do the standard weekly shop. This split in shopping habits means businesses can’t gear their supply chain to just one type of shopper, but must look at the detail in order to design a model that will serve all shoppers in the most efficient way. Multiple routes to market will have similarities, so it’s key that the supply chain is tailored to take advantage of synergies that exist, whilst providing robust ‘last mile’ solutions that deliver the service required. Information flows and data visibility will be a key aspect to the successful solution design and execution.

 

Dealing with Brexit

Brexit is looming large and will undoubtedly affect every business once we have finally left the EU. The level of uncertainty it has caused will no doubt affect trading and investment as businesses are cautious as to what the new world will hold. Early clarity of Brexit is all anyone can hope for, so businesses can plan with confidence as we head into this new era. However, Britain is an innovative and adaptable country that will continue to create opportunities for itself and its businesses under any circumstances.

Fowler Welch has had a great 2016 and we look forward to further developments and success for 2017.