NRF Study: Supply Chain Efficiency Key Retail Issue for 2005

Jan 20, 2005

By Ronald Margulis

Retailers will continue to focus on supply chain efficiency this year, while issues like product assortment, technology and store design will receive an increased amount of attention from managers. According to the third annual “Retail Horizons: Benchmarks for 2004, Forecasts for 2005,” by the National Retail Federation Foundation and BearingPoint. The study, unveiled Tuesday at the NRF Annual Convention & EXPO in New York, said that the majority of retailers cite supply chain optimization as a priority initiative for getting closer to the customer.

Other key findings of the study include:

  • Almost 25 percent of retailers plan for half of their merchandise assortments to be private label.

  • In the next 12 months, more than half of retailers (57 percent) plan to replace or upgrade their point-of-sale systems.

  • While 38 percent of retailers will focus on domestic expansion, 17 percent will focus on international expansion.

  • This year, 33 percent of retailers will focus on redesign and relocation of stores.

“Retailers realize that in order to improve their businesses, it is important for them to reinvest in new technologies and programs,” said NRF President and CEO Tracy Mullin. “Consumers are rewarding retailers who utilize resources to feature new merchandise, new technology, and new ideas.”

The study suggests several approaches retailers can take to attain competitive advantage and generate better profitability:

  • Develop a synchronized demand network that eases inventory pain by providing trading partners with optimal flow through of product and near-real time sharing of forecasts and demand signal.

  • Link disparate systems for common connectivity to aid in retailers’ streamlining of operations.

  • Target and segregate high-value customers from low-and no-value customers and provide the right combination of product and services to earn loyalty. 

Moderator’s Comment: What issues will get the lion’s share of the retail CEO’s attention this year?

Walking around the NRF show earlier this week, and listening to retailers (OK, eavesdropping on conversations), two things were very clear: 1) retail executives
are being asked to make the shopping experience more engaging in an effort to capture more of the consumer’s time and money, and 2) growing top line sales is as important as growing
the bottom line because of the leverage retailers want to gain with their suppliers.

Not that addressing supply chain efficiency is falling to the back burner, but seven of the 10 retailers I talked with at the show said they are increasingly
looking to capture more market share and devoting resources to merchandising and other in-store activities to accomplish this goal. Only one mentioned supply chain efficiencies,
and he is a CIO facing a considerable integration project following an acquisition.

Ronald Margulis – Moderator

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