Who could have anticipated the journey that retailers, along with so many other businesses, weathered in 2021? With a full week of 2022 now behind us, Retail Council of Canada discusses some of the issues that continue to impact retailers along with how retailers are adapting to expect the unexpected at every turn.
The most unprecedented issue for retailers in 2021 was the swift onset of supply chain challenges at almost every node of the system, faced by manufacturers and retailers around the world. Retailers put in place contingency plans to maximize the likelihood of products making it to store shelves by ordering earlier, increasing inventories and diversifying suppliers and product mixes. As a result, there was almost always plenty of product on the shelves, but product delays, shortages of specific brands and models, along with rising prices, are expected to continue well into 2022. Expect to see retailers examining what they can do to adjust their supply chain to bring it closer to home. Approaches such as more strategic sourcing options in North America, along with different strategies to pre-order inventory, move goods and replenish stores, will be considered to manage ever increasing supply chain challenges.
Labour shortages also dogged retailers throughout 2021 and are increasingly becoming problematic today. Retailers are currently reporting employee absenteeism up to 20% due to the Omicron variant. A lack of available testing is intensifying the problem. Retailers continue to respond to systemic staff shortages with a variety of strategies including incentives, compensation, signing and retention bonuses and innovative recruiting tactics as well as, where appropriate, self-service technology in the stores. RCC expects to see ongoing labour shortages persist, especially if consumers continue to turn more to eCommerce and online shopping, both of which can require adjustments for staffing in distribution warehouses, customer service centres, IT, and transportation infrastructure.
Looking ahead, retailers are also concerned with the rippling effect throughout the supply chain, especially in transportation, which is compounding the problem of labour shortages. Some retailers are starting to see inbound shipments to their distribution centre slowed due to drivers from vendors off sick. With the vaccine mandate for truck drivers coming into effect on January 15, 2022, trucking associations have forecasted that a significant number of truck drivers will stop all cross-border travel, which RCC fears will result in another spike in freight costs as well as further disruption to supply chains.
The ongoing challenges above show that as an industry, there is still a long way to go to return to pre-pandemic “normality.” Yet, while the trials of 2021 were significant, RCC hopes that by continuing to work closely with public health officials and governments across the country – and with strong support from our customers – retailers will get through 2022 and beyond.
SOURCE Retail Council of Canada