The future of retail supply chains

Digitization enables new sales and distribution channels. With digital developments such as those encompassed by everywhere commerce or retail disruption, consumers expect a convenient shopping experience on user-friendly, one-stop shopping platforms.

New technology creates new expectations – and provides supply chain solutions
Customers have grown used to the new standards enabled by digital technology and expect transparent, reliable and fast delivery. In response, retail businesses need to consider their networks and processes for efficiency and reliability – including, for example, digital twins of warehouse operations and tracked transportation.

Digitization also enables businesses to respond to labor shortages – for instance by implementing a variety of automated solutions – and improve their logistics processes with algorithmic retail by using big data and AI.

The demand for seamlessly integrated online and offline services is met by omnichannel retail. To target Gen Z customers, who engage in shopping activities using social media more than any other group, integrating all communication into one platform is vital. For other customer groups, shopping in physical stores continues to be an essential part of the retail experience.

Integrating supply chain processes in omnichannel retail
In omnichannel retail, inventory is shared between channels. Intralogistics, transportation processes and resources are similarly coordinated between channels. Effective fulfillment and reverse logistics processes are only possible if sales channels are fully integrated physically, informationally, and financially.

Despite these challenges, omnichannel is being embraced by former pure players of the online faction like Amazon as well as brick-and-mortar specialists like Walmart.

Retail businesses must consider the requirements of the growing urban population, including comfort and convenience. At the same time, the scarcity of space and the congestion of urban infrastructure cause key problems related to mobility.

Logistical challenges in urban environments
Delivery must become more efficient to meet the demand for quick commerce. In areas with limited space, smart solutions for interim storage are key for success. Micro-hubs, dark stores, or shared warehouses are only a few examples.

Coordination of urban logistics is often initiated by local government and city planners to lessen the strain on urban infrastructure. Solutions like loading zones, city tolls and vehicle access regulations address this goal – and require new solutions for retail supply chains.

Sustainability is increasingly important for consumers. Especially in grocery shopping, ecological and ethical awareness affect purchasing decisions, even if extremely high inflation is an inhibitory factor.

Sustainable supply chains in retail
Food retail companies are starting to consider sustainability in sourcing – where near-shoring and direct trade can help retailers reduce their footprints – and in warehousing and transportation. For these processes, warehouse location structures, optimized inventory levels and low-emission transportation, for instance with electric trucks, are important levers. New delivery concepts like crowd delivery or CEP collaboration can also help reduce emissions.

At the same time, government objectives like climate neutrality goals or closed substance cycle regulations will likely make adjustments to retail supply chains necessary.