Following a year of supply chain disruption and uncertainty, Lee Thompson, managing director of international fulfilment services provider fulfilmentcrowd looks at the trends set to impact retail supply chains this year.
Exports have been something of a headache for UK-based retailers during the last 12 to 18 months. Disruption and volatility caused by post-Brexit trading changes, COVID-19 and the Suez Canal blockage, have meant that many eCommerce retailers, especially SMEs, have honed-in on UK-only sales. This will change in 2022.
Positive steps continue to be made in addressing export and import tariffs between the UK and the US. Admittedly, there’s still some way to go in lifting Trump-era tariffs, however, there seems to be a growing consensus that the tariffs aren’t really working for either nation. The lowering of duties will reinvigorate trading between the UK and US, as retail prices won’t be swelled by tariffs and products become more affordable for a wider audience of shoppers.
The beginning of January also saw the introduction of new, full customs controls between the UK and the EU. This will ratify many of the post-Brexit trading changes, which can be considered permanent and, as a result, there is greater clarity as to what is required to effectively trade within the bloc. Incorporation of EU entities and dual/multi territory location of stock is becoming a well-grooved process, supported by a host of providers in services such as logistics, tax and legal compliance. UK-based companies will face fewer challenges and be more inclined to start investing in exports again.
Many retailers are increasingly seeking out the positives from supply chain delays and shortages. They are reviewing their supply chains and utilising rich stock inventory management data to reconsider the returns on what they sell.
Driver shortages, competitive and costly international freight and border delays have really put the value of time and resource into perspective. We’re working with many eCommerce retailers to really scrutinise the profitability of each item of stock – a trend that will gather pace in the next few months. Retailers will utilise quieter, post-peak periods of demand to pore through supply chain and stock inventory management data to find efficiencies, ways of minimising margin dilution and methods of achieving optimal retail selling prices. This will lead to rationalise and streamlining of stock, with low return items stripped out of sales and supply chain strategies to improve resilience and returns in 2022.
The review of stock performance will also drive trends of premiumisation and personalisation. Retailers will trade up to stocking more premium, higher margin products, which offer higher returns on valuable transportation space. They will also utilise sales and stock inventory data to develop more bespoke, personalised marketing and services for shoppers. By better understanding what is selling and who is buying it, they can quickly and cost-effectively up and cross sell across ranges.
Cleaner, greener packaging
2022 is a big year for delivery packaging. The Green Claims Code will be enforced from January and the UK Plastic Packaging Tax becomes effective from 1 April 2022. The Code is designed to encourage more truthful and accurate environmental messaging on packaging, while the new Tax aims to improve the use of recycled material in plastic packaging.
Together, these changes require brands to increasingly think about the environmental footprint of their packaging and are also likely to drive further consumer demand for more sustainable packaging. This will redefine packaging strategies for eCommerce brands and retailers, as sustainability becomes critical to the success of ‘unboxing’.
Packaging must become ‘greener’ as companies aim to use less material and more recycling-compliant solutions. It’ll become ‘cleaner’ as packages become less cluttered with eco claims and brands find more innovative ways to engage consumers with their sustainability credentials.
Lee Thompson is managing director of fulfilmentcrowd, which picks, packages and delivers products for more than 500 eCommerce retailers across the UK.