Predictions 2022 – Retail and supply chain

2021 was a tough year for the supply chain industry. Not only was the industry forced to keep up with the ever-developing pandemic, but they also had to battle rising transport costs, shipping shortages and a lack of chip supplies which impacted electronics and motor vehicle supply chains. At the forefront, the retail sector saw major acquisitions take place in Q1 with ASOS acquiring retail giant Topshop for £295 million, and Boohoo purchasing the Debenhams brand, relaunching it as an online-only marketplace.

With the industry growing at such a fast pace, retailers have no choice but to become more agile with their supply chains. Luke Large, Manager at Capgemini Invent shares some of the trends and new technologies that will shape the retail and supply chain industry in the year ahead.

Technology to deliver better agility and resilience

After a very turbulent 2021, we can expect improvements to the running of supply chains in general thanks to an increased focus on digital transformation. Of course, COVID-19 hasn’t gone away and will still have an impact throughout 2022, but as we continue to better manage it, retailers will look to apply technologies such as artificial intelligence (AI) and machine learning (ML) technology to help support their operations and combat the setbacks caused by the pandemic.

One innovation that we can expect to shape this market in the months ahead is Digital Twin – a software that uses real-world data to create simulations that can predict how a product or process will perform. End-to-end supply visibility, a process that is able to know where a company’s stock is in the supply chain and deploy it to the areas which need it most, is starting to gain some momentum, too. We’re also likely to see better forecasting through deeper analysis of data input, especially at a local level, to support micro trends in a bid to overcome the unforeseeable.

Conscious consumption

Thanks to COP26, we’re seeing an ever-increasing number of conscious consumers, and so it’s very probable that 2022 will see retailers attempting to address some of these sustainability challenges.
For one, near-sourcing and local manufacturing will help to create a more controllable supply chain with shorter lead times, allowing retailers to better respond to demand. We might also see the standardisation of a pre-order model, such as that introduced by online luxury fashion retail platform Farfetch in 2021, which aims to minimise fashion waste by only producing what has already been sold.

More sustainable supply chains

Closely related to the growing ubiquity of conscious consumers is the increasingly sustainable nature of supply chains. The circular economy and returns are seen as a major challenge in the supply chain. However, innovations such as connected products, with its ability to track and inform retailers and suppliers might well help facilitate sustainability goals. This technology would see product interacting with the supply chain and support future business models. If this happens, retailers and suppliers will be able to remotely monitor the life of a product, ensuring the consumer get the best full life cost out of a product and when it is likely to require repair or replacing.

Partnerships and collaboration for cost optimisation

Retailers and their suppliers need to work more closely together, not only for growth and innovation, but for sustainability and cost optimisation too. This, which is known as integrated value chain, is something we’ll see in the coming year, with retailers and their suppliers sharing their IP and delivering joint initiatives on research and development.

By ensuring their entire supplier base have the same objectives and are on the same journey, retailers will also be able to achieve their sustainability targets more quickly.

The metaverse

Retailers are already seriously considering how they can play a part and begin making moves in the metaverse as they look to capitalise by selling virtual products at real-world prices. To date, we’ve seen high street giant, Zara take a leap into the metaverse. In late 2021, it partnered with Korean label Ader Error, launching its first virtual collection on the ZEPETO platform, where users can purchase digital versions of the physical range for their avatars.

In 2022, retailers will need to shift their mindsets and utilise the metaverse as a marketing platform to develop new products – it will be another source of consumer data available for retailers to utilise. Consumers will head to the stores to purchase the physical goods they’re interested in whilst in extended reality.

Looking to the year ahead and beyond, the retail and supply chain industry will need to recognise the importance of implementing new technologies and learning to work closely together in order to keep up in an ever-growing society that demands more. As we know, the whole world can change in the blink of an eye and retailers must be ready to take on new approaches to make sure they’re better positioned for the future and any other hurdles that come their way.

For more information download the Capgemini Research Institute reports here,