Deep Dive: Retail X Factor— Supply Chain - Deborah Weinswig · analytics in one central system. The three key elements needed to transform the supply chain: optimization, speed

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DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

1) ThisisthethirdreportinourXFactorseriesonthemajor factorsimpactingtheUSretailindustry.Webelievesupply-chain efficiencywillbeakeyfactorthatwillmakeorbreakaretailer goingforward.

2) Cost-cuttingandenhancingoperationalefficiencyarekeyareas thatmajorUSretailershavebeenemphasizingontheirearnings callsthesepastfewquarters,astheindustryfacesthechanging preferencesofconsumerswhoareincreasinglyembracingonline shopping.

3) Wehaveidentifiedthreekeyinitiativesthataretransforming supply-chainoperations:optimization,speedandinnovation.

4) Digitalizationwillinevitablytransformthewayretailersoperate brick-and-mortarstores,ultimatelyinvolvingeverystakeholder alongtheretailvaluechain.

Deep Dive: Retail

X Factor— Supply Chain

Deborah Weinswig

Managing Director,

Fung Global Retail & Technology

[email protected]

US: 917.655.6790

HK: 852.6119.1779

CN: 86.186.1420.3016

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TableofContents

ExecutiveSummary..........................................................................................................................3TheSupplyChainasanXFactorofRetail................................................................................3

InventoryLevelsarePickingUpAgain.............................................................................................5

PhysicalRetailers’Supply-ChainInitiatives......................................................................................6

Amazon’sSupply-ChainInitiatives.................................................................................................10DigitalizationoftheSupplyChain..........................................................................................11

Conclusion:InnovateorDie...........................................................................................................12

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ExecutiveSummaryThisisthethirdreportinourXFactorseriesinwhichweidentifythemesthatwebelievewillbecriticalfortheUSretaillandscapein2H17andbeyond.

Inthisreport,wefocusonthesupplychain.Wesummarizethechallengesthatretailersfaceintheirsupplychainsandanalyzetheinitiativestheyhaveembarkeduponoverthepastfewquarters.Basedonourfindings,weseetheneedforretailerstodigitalizethesupplychaininordertobetterpositionthemselvestocompeteintheincreasinglychallengingretailindustry.

XFactor―CompetitiveAdvantagesthatCouldRevolutionizeanIndustry

TheSupplyChainasanXFactorofRetailTherapidlychangingretailenvironmentanddisruptionfrome-tailershavecausedtraditionalretailerstosufferfromdeceleratingtop-linegrowth.Cost-cuttingandenhancingoperationalefficiencyhavebecomethefocalpointsofdiscussionduringearningscallsthesepastfewquarters.Byinvestingintheirsupplychains,retailersarelookingatsolutionsthatwilleventuallytransformhowtheysourceanddelivergoodstotheconsumer.

Byanalyzingconversationbetweentopmanagementandanalystsduringrecentretailers’earningscalls,wehavesummarizedthreekeyinitiativesthataretransformingsupply-chainoperations:

• Optimization:Increasingtheefficiencyofthesupplychain,whichleadstoshorterleadtimesaswellascostsavings.

• Speed:Enhancingspeed-to-marketsoretailerscanmanagetheirinventoryandproductofferingswithmoreflexibility.

• Innovation:Investinginnewsupply-chaintechnology.

Inordertoadapttothefast-changingretailingenvironment,retailersneedtolookatdigitalizationtotransformthewaytheyoperatetheirbrick-and-mortarstores.Thetransformationneedstoinvolveeverystakeholderalongthevaluechain,andalltheprocessesandinformationflows―suchasdataaccessibility,datasharing,collaborationanddataanalytics―needtobefluidandtransparent.

Figure1.Supply-ChainInitiativesSummaryTable(Sortbyalphabeticalorder)

RetailersSupplyChainInitiatives

Optimizations Speed InnovationsTraditionalRetailersJCPenney • CloseditsLakelandDistribution

Center.• Formedatrialpartnershipwithsupplierstoshiftstocktosuppliersinordertoreduceinventory.

• Improvedclearanceprofitabilitythroughtheimplementationofnewpricinganalyticsandsupply-chainefficiencies.

• Cuttheleadtimefromdesigntosalesfloorfromaprivatebrand’sprocess.

• Gavebettervisibilityontrendsandbettervisibilityonwhatthecustomersarebuying.

• Integrateditsdata-drivenapproachtopricingandstandardizedpricinganalyticsinonecentralsystem.

Thethreekeyelementsneededtotransformthesupplychain:optimization,speedandinnovation.

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RetailersSupplyChainInitiatives

Optimizations Speed InnovationsTraditionalRetailersKohl’s

N/A

• Theproportionoftheproprietarybrandbusinessimpactedbyitsspeedinitiativewillincreasefrom25%attheendof2016toabout40%ofoverallproprietarysalesin2017.

• Leveragingtechnologytoincreasethepercentageofinventoryshippedfromstorestofulfillonlinedemandoronlinedemandpickedupin-store.

Macy’s,Inc • Consolidatedthenumberofitssuppliers.

• Reducedtheamountofapprovalsandstepsneeded.

• Triedtospeedupthedecision-makingprocesswithgreatercollaboration.

• Increasedthepaceoftime-to-marketandworkedcloselywithprivatebrandsandreactedtomarketchangesquickly.

• Encourageditsbrandpartnerstobemorecreativeandsharedopportunitiesthroughdataandinnovation.

Nordstrom • Spendingonsupply-chaintechnologyhasgrownby20%onaverageoverthepastfiveyears.

N/A

• Expectedtoinvestroughly$3.4billionoverthenextfiveyears.

• Roughly40%ofthecompany’splanisallocatedtomodernizingitstechnologyplatform.

• AcquiredDSCo.whichprovidesacloud-basedservicetotrackinventoryandorders.

Sears • Improvedbothflexibilityandprofitabilityinthesupplychainbyincreasingitssourcingcapabilities.

• Madeitsinventoryacrosstheentirestorenetworkavailabletomembers.

• Enabledcustomers’orderstobefulfilledbytheneareststore.

• Connectedtheecosystemofstoresandwarehousesbyleveragingtechnologyandsupply-chainplatforms.

BigBoxandWarehouseClubsTarget • Openedanewfacilitytotest

differentiateddistributioncapabilities.

• Dramaticallyreducedstorelabordedicatedtounloadingtrucksandstockingthesalesfloor.

• Beganatestthatofferssame-daydelivery.

• TargetRestockallowscustomerstoorderarestockshippingboxfilledwithessentialitemsandhavethemdeliveredtotheirhomesquicklyforalowflatfee.

• Allocatedcapitalinvestmentofmorethan$7billionoverthenextthreeyearstofocusontechnologyandthesupplychain.

• Gainedinsightsthroughsupply-chaindatatounderstandpotentialoperationalchallengesanddetermineappropriatepricinganddeliverywindowsbasedonconsumers’preferences.

Walmart • Doubledtheefficiencyofitstruckfleet.

• Controllingthesupplychainbyhavingdirect,long-termrelationshipswithgrowersfortheirgrocerybusiness.

• Adoptednewtechnologyandappstoprovidereal-time,in-stockinformationoninventorylevels.

OnlineRetailerAmazon • Investedinbuildingfulfillment

centersandwarehousesclosetomajormetropolitancities.

• DashisaWi-Fi-enableddevicethatreordersfrequentlypurchasedconsumerproductswithasinglepressofabutton.

• Filedapatentforaflyingwarehouseconceptthatcanactasalaunchpadfordeliverydronesforlast-miledelivery.

• Hasmorethan45,000robotspoweredbyKivaSystemsinitswarehouse.

• Filedapatentforanon-demandapparelmanufacturingwarehouse.

Source:Companyearningscalls

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InventoryLevelsarePickingUpAgainManyUSretailershavebeensufferingfromweakeningtop-linegrowthinthepastfewquarters.Decliningmalltraffic,anoverstoredindustryandthestructuralshiftinconsumers’preferencestowardonlineshoppinghavecontributedtothestagnantdemandatphysicalstores.

Mostretailersstrivedtoadoptaninventory-lightmodelafterthefinancialcrisisin2008;forexample,Walmart,increasedinvestmentinitssupplychain.However,emerginge-tailershavebecomeadisruptiveforcethatisdrivingrapidchangeintheretailindustry,andretailersmustonceagainadapttosurvive.

Lookingatinventoryturnoverataselectgroupofretailersanddepartmentstoressince2008,wenoticethattheinventorylevelsofmajorretailersarerising.EvenatWalmart,knownforitsworld-classsupply-chainmanagement,itsinventoryturnoverin2016wasclosetolevelsseenin2008―whichwereunusuallyhighbecauseoftheaftereffectsofthefinancialcrisis.

AndifwelookatAmazon,eventhoughitsinventoryturnoverhasalsoincreasedovertheyears,thisislargelyduetoitsstrategyofofferingasmanydifferentproductsaspossible.AccordingtoExportX,whichisane-commercecompany,Amazonoffered488milliondifferentproductsin2015,introducinganaverageof485,000newproductsperday(bycomparison,Walmartoffersapproximately150,000productsatitsSupercenterstoreformat).Themassiveselectionmeansinventoryturnoverrisessignificantly.

Figure2.AverageInventoryTurnover(IndexedInventoryTurnoverin2008=100)

Source:Bloomberg,FungGlobalRetail&Technology

Assuch,increasingsupply-chainefficiencyhasbecomeakeyareaforretailerstosharpentheircompetitiveness.Inthestrategyupdatesduringretailers’conferencecallsthesepastfewquarters,seniormanagementhavereiteratedtheirfocusoncostcuttingandopeningupnewrevenueopportunitiesbyinvestinginsupplychains.

80859095100105110115120125130

2008 2009 2010 2011 2012 2013 2014 2015 2016

Walmart Macy’s NordstromKohl’s JCPenney Sears

Inventoryisbuildingupagainduetoinefficienciesinsupply-chainmanagement.

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Inthesecondpartofourreport,wesummarizethekeypointsthattopmanagementatMacy’s,Walmart,Kohl’s,Nordstrom,JCPenney,Sears,TargetandAmazonhasmentionedduringtheirrecentearningscalls.

PhysicalRetailers’Supply-ChainInitiativesWebreakoutthetopretailers’supply-chaininitiativesintothreekeycategories:

• Optimization:Increasingsupply-chainefficiency

• Speed:Enhancingspeed-to-market

• Innovation:Investinginsupply-chaintechnology

JCPenney

ChallengesandPrioritiesMarvinEllison,PresidentandCEOofJCPenney,saidthekeybenefitofe-commerceisconvenience.JCPenneyhadbeenlearninghowtosimplifythein-storeenvironmentsoitcanofferabettershoppingexperience.Optimizingthenetworkfromanomnichannelstandpoint,JCPenneydecidedtoclosesomestorestoensureitcouldserviceitsomnichannelcustomersmoreeffectively.

Supply-ChainInitiatives• Optimization:JCPenneyhascloseditsLakelandDistributionCenterand

formedatrialpartnershipwithsupplierAshleyFurniture,shiftingstocktothesupplierinordertoreduceheldinventory.Itisworkingonimprovingitsreplenishmentprocessdomesticallyandtobelessdependentonaverylongsupplychain.Inaddition,theretailerhasmadeeffortstoimproveinventoryclearanceprofitability,implementnewpricinganalyticstoolsandenhancesupply-chainefficiencies.

• Speed:JCPenneyhasreducedtheleadtimefromdesigntosalesfloorintheprivatebrands’manufacturingprocess,allowingbettervisibilityontrendsandonwhatthecustomersarebuying.

• Innovation:JCPenneyhastakenadata-drivenapproachtopricingandstandardizedpricinganalyticsintoonecentralsystem.

Kohl’s

ChallengesandPrioritiesAccordingtoKevinMansell,CEOofKohl’s,theweakapparelenvironmenthashurttoplinegrowth.Kohl’sstrivestomaketheproductofferinginunderperformingstoresmorerelevantandmoreeffective.Itintendstocontinuetolowerinventoryperstorebyabout3%peryearoverthenextthreeyears,withlargerinventoryreductionsatitsretailstoresandatitswarehouses.

MarvinEllison,PresidentandCEOofJCPenney,saidthekeybenefitofe-commerceisconvenience.

TheweakapparelenvironmenthashurttoplinegrowthofKohl’s.

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Supply-ChainInitiatives• Speed:Kohl’sfocusesonspeedandlocalizationinitiativestoimproveits

supplychain.Thisspringitexpandeditsspeedinitiativetootherprivateandexclusivebrandsacrosstheapparelandsofthomecategories.Thepercentageoftheproprietarybrandbusinessofoverallproprietarysalesimpactedbythisspeedinitiativewillincreasefrom25%attheendof2016toabout40%in2017.

• Innovation:Kohl’sisleveragingtechnologytoincreasethepercentageofinventoryshippedfromstorestofulfillonlinedemandoronlinedemandpickedupin-store.

Macy’s

ChallengesandPrioritiesDuringrecentearningscalls,Macy’smanagementhascommentedonthehugechallengeithasbeentofindtherightsizefitforitscustomers.Itisdifficulttostandardizesizesandpatternsforeachoftheirbrandswhentheyhavedifferentmanufacturingandsourcingpartners.Toensurethestoreshavethesizeandcolorthatthecustomerwantsinstock,Macy’sneedtobuildtheassortmentsandholdsufficientstockforthebest-sellingstyles.

Supply-ChainInitiatives• Optimization:In1Q17,JeffreyGennette,PresidentandCEOofMacy’s,

saidthecompanyhasconsolidatedthenumberofsuppliersitworkswithintheFarEastandnowhasembeddedteamsinplacetoreducetheamountofapprovalsandstepsinthebuyingprocess.

• Speed:Macy’shasalsotriedtospeedupthedecision-makingprocessthroughgreatercollaboration.Thishasmeantincreasingthepaceofthedecision-makingprocessandworkingcloselywithprivatebrandsandreactingwithmarketchangesmorequickly―beingmoreagileandthusabletomakedecisionsmorequickly.

• Innovation:Macy’sencouragesitsbrandpartnerstobemorecreativeandshareopportunitiesthroughdataandinnovation.

Nordstrom

ChallengesandPrioritiesAccordingtoMichaelKoppel,ExecutiveVPandCFOatNordstrom,theretailerhasbeenworkingthroughtheoperationalchallengesofoperatinganintegratedin-storeandonlinebusiness,asitdidnothaveallthesystemsfullyaligned.Processingreturnsmadeonlinein-storeandfindingtherightwaytobalanceinventoryarealsokeychallengesthecompanyfaces.Duringrecentearningscalls,managementhasalsomentionedchangingcustomerexpectations―whatcustomersexpectnowadaysisverydifferentfromwhattheyhadexpectedinthepast.

Macy’smanagementhascommentedonthehugechallengeithasbeentofindtherightsizefitforitscustomers.

MichaelKoppel,ExecutiveVPandCFOatNordstromsaidwhatcustomersexpectnowadaysisverydifferentfromwhattheyhadexpectedinthepast.

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Supply-ChainInitiatives• Optimization:Spendingonsupply-chaintechnologyhasgrownby20%on

averageoverthepastfiveyears.

• Innovation:Nordstromexpectstoinvestroughly$3.4billionover thenextfiveyears.Roughly40%ofthecompany’splannedexpenditure hasbeenallocatedtomodernizingitstechplatform,makingdigitaland mobileenhancementsandexpandingthefulfillmentnetwork.Nordstrom acquiredDSCo.,aproviderofcloud-basedservices,totrackinventory andorders,andhencelowerretailers’costsbyrequiringthemtohold lessinventory.

Sears

ChallengesandPrioritiesAweakdemandenvironment,warmweather,increasedpromotionalactivitiesandintensecompetitionarethekeychallengesthatSearshasmentionedonitsrecentearningscalls.Thecompanyintendstoimprovetheperformanceoftheapparelbusinessthroughchangesinsourcing,productassortment,spaceallocation,pricing,expensemanagementandinventory-managementpractices.

Supply-ChainInitiatives• Optimization:Searsisworkingonimprovingbothflexibilityand

profitabilityinthesupplychainbyimprovingitssourcingcapabilities.

• Speed:Thecompanyismakinginventoryacrosstheentirestorenetworkavailabletomembersofitsloyaltyclubsocustomerscansearch,findandpurchaseitemsregardlessofphysicallocation.Thesystemenablesthestoreclosesttothecustomertofulfilltheordersoitcanbedeliveredfasterandatalowercost.

• Innovation:Searsistakingstepstoconnecttheecosystemofitsstoresandwarehousesbyleveragingtechnologyandsupply-chainplatforms.Thishasallowedthecompanytodeliverto99%ofUShouseholdswithintwodaysorless.

Target

ChallengesandPrioritiesJohnJ.Mulligan,COOofTarget,reiteratedthatthechallengefacingthecompanyistomakeretailshoppingmoreexperiential―inotherwords,deliveringmoreoftheinspirationthatconsumerscanonlyfindinthephysicalstores.Heexpectsconsumerstocontinuetobedrawntoe-commercetosavetimeonshoppingandemphasizedthatretailersneedtounderstandhowconsumers’preferencesandexpectationsareevolving.Bybeingabletoanticipatethedirectionconsumersareheading,retailerscanfindnewwaystoengagethemateverystage.

Aweakdemandenvironment,warmweather,increasedpromotionalactivitiesandintensecompetitionarethekeychallengestoSears

JohnJ.Mulligan,COOofTarget,reiteratedthatthechallengefacingthecompanyistomakeretailshoppingmoreexperiential.

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Supply-ChainInitiatives• Optimization:TargetopenedanewfacilityintheNortheastthatwill

allowtheretailertotestdifferentiateddistributioncapabilities,includingstorereplenishmentbasedontheappropriateunitofmeasureoneveryitem.Targethasalsodramaticallyreducedhoursofstorelaborthatisdedicatedtounloadingtrucksandstockingthesalesfloor,sothatthestorelaborcanfocusonservingcustomers.

• Speed:AtitsTribecastoreinNewYorkCity,Targetisreadytobeginbeta-testingofsame-daydeliverytocustomersatthatstore.TargetRestock,whichwillbeginrollingouttotheTwinCities,allowscustomerstoplacearestockorder―aboxfilledwithessentialitems,suchastoothpaste,diapers,coffeeandcereal―andhaveitdeliveredtotheirhomesquicklyforalowflatfee(constrainedbyaweightlimit).

• Innovation:Targethasallocatedcapitalexpenditureofmorethan$7billionoverthenextthreeyearstofocusontechnologyanditssupplychain.Itplanstobuildasmartnetworkthatleveragesallitsstoresanddistributionassetstoserveconsumersmorequicklyandmoreflexiblyineverychannel.Bydigitalizingthesupplychain,Targetcangaininsightintothepotentialoperationalchallengesanddetermineappropriatepricinganddeliverywindowsbasedonconsumers’preferences.Theseinnovationsaredesignedtoprovidemoreconvenience,inspirationandfasterfulfillment.

Walmart

ChallengesandPriorities Onrecentearningscalls,DouglasMcMillon,CEOofWalmart,hasreiteratedfourprioritiesforthecompany:

1. Makeeverydayeasierforbusyfamilies.

2. Operatewithdiscipline.

3. ChangehowWalmartworksbybecomingamoredigitalenterprise.

4. Deliverresultsandpositionthecompanytowin.

Walmartfocusesonsustainabilityandenhancingtheshoppingexperienceforitscustomers.

Supply-ChainInitiatives• Optimization:Ithasdoubledtheefficiencyofitstruckfleet.

• Speed:Walmartcontrolsthesupplychainforitsgrocerybusinessbyhavingdirect,long-termrelationshipswithfoodgrowers.

• Innovation:Walmarthasadoptednewtechnologyandappstoprovidereal-timeinformationtoimprovein-stocklevelsandbettermanageinventory.

Walmartfocusesonsustainabilityandenhancingtheshoppingexperienceforitscustomers.

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Amazon’sSupply-ChainInitiativesNext,welookathowAmazondifferentiatesitselfthroughsupply-chainmanagement.

Basedonthethreefactorsdiscussedabove,wehighlightafewexamplestodemonstratewhatAmazonisdoingcomparedtotraditionalretailers:

• Optimization:ForitsPrimeMembers,Amazonoffersfreetwo-hourshippingineligibleareasorfreetwo-dayshipping.Toenablesuchanefficientlogisticsprocess,Amazonbuiltfulfillmentcentersandwarehousesclosetomajormetropolitancitiesafewyearsago.Duringitsfirstquarter2017earningscall,BrianOlsavsky,SVPandCFO,mentionedthatmostofthe51%year-over-yeargrowthincapexwasspentonexpandingthefulfillmentnetwork.Thisechoedlastyear’s“DragonBoat”initiative,whichBloomberghassaidisacorporatestrategytotakecontrolofAmazon’send-to-endsupplychainglobally.Amazonalsoformedateamtofocusonthedevelopmentofdriverlesstechnology,andalsoaimstoachievelogisticsautomation,accordingtotheWallStreetJournal.

• Speed:Amazoniscontinuouslyinvestingintechnologiesandproductsthatautomatetheshoppingprocessandspeedupfulfillment.It’sDashButtonisadevicethatmakesreorderingcertainproducts,suchasdetergent,aseasyasthepushofabutton.Lastyear,Amazonalsofiledapatentforaflyingwarehouseconceptthatactsasalaunchpaddispatchingdeliverydronesforlast-miledelivery.Theconceptcallsforablimporairshipthatwouldactasaflyingfulfillmentcenterhoveringintheairwheredemandforcertainproductsisramping.

• Innovation:AccordingtoTheSeattleTimes,Amazonnowhasover45,000robotsinitswarehouses.PoweredbyKivaSystems,theserobotscansort,pickandpackorderswithoutanyhumanintervention.Inaddition,AmazonlaunchedahomevirtualassistantAlexa―anAI-powereddevicethatithopeswillbecomethecentralnervoussystemoftheconnectedhome―whichenablesshoppingthroughvoicecommands.Inlate2015,anotherpatentfilingfromAmazonshowsanon-demandapparelmanufacturingwarehousethatcanquicklyproducetheproductafteranorderisplaced.Thesystemwouldincludeanassemblyline,cuttersandtextileprinters.

Primemembership,theDragonBoatinitiative,DashbuttonsandwarehouserobotsaresomeexamplesofhowAmazonisdigitalizingitssupplychain.

DashandAmazonwarehouserobotshelpAmazontodigitizethesupplychain.

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Figure3.Amazon’sWarehouseRobots

Source:Amazon

DigitalizationoftheSupplyChainInordertoenhanceoptimization,speedandinnovationofthesupplychain,retailerswillneedtorelyondigitalizationtotransformtheirsourcinganddistributionprocessesaswellashowtheyoperatebrick-and-mortarstores.Thetransformationwouldrequireeverypartneralongtheretailvaluechaintobeinvolved.

Someexamplesofdigitalizationalongthevaluechaininclude:

• Productdesign:Digitaldesignsoftware,cloudcomputing,virtualsampling,predictiveanalyticsand3Dprinting.

• Manufacturing:InternetofThing(IoT)technology,sensorsanddigitalprinting.

• Distribution:Robots,autonomousvehicles,blockchaintechnology,radio-frequencyidentification(RFID)andnear-fieldcommunication(NFC).

• Sales:Technologythattracksinventoryand/orconsumerbehavior,whichincludesdeviceswithradio-frequencyidentification(RFID)sensorsthatcantrackthelocationandmovementofitemsin-store,aswellastrackconsumerbehaviorin-store.

Onthesupply-chainside,end-to-endinventorytrackingthroughIoTenablescloserintegrationwithallstagesofthesupplychain,i.e.,distribution,supportingmoreefficientoperationsandlimitingtheoccurrencesofmisplacedorout-of-stockitems.

Digitalizationcantransformthesupplychain.

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Connectedsupplychainsalsoincreasetheopportunitiesforcustomerstoconnectandinteractwithproducts,andretailerstocapturenewrevenueopportunities.In-storeconnectedtechnologyincreasesmerchandiseengagement—forexamplebyusingsmartmirrorsthatenablecustomerstovirtuallytryonitemsorthroughNFCtagsthatsendinformationaboutanitemtothecustomer’ssmartphone.

Formoredetailedanalysisofdigitizationofthesupplychain,pleaserefertoourreports:IoTinRetail—DigitalizingBrick-and-MortarStoresandAnOverviewoftheDigitalizationoftheApparelSupplyChain.

Conclusion:InnovateorDieThebrick-and-mortarchanneliscurrentlylosingthegrowthfighttoe-commerce.Asaresult,majorretailersareundertakingnewsupply-chaininitiativesfocusingonoptimization,speedandinnovationinordertosurviveinthenewdigitalcommerceera.Thepremiseistomakephysicalretailingasconvenientasonlineshoppingfortheconsumer,andtoachieveoperationalefficiencybasedonanomnichannelbusinessmodel.Giventhespeedoftechnologicalinnovation,traditionalretailbusinessesarefacedwithan“innovateordie”propositionandonemajorareathatrequiresinnovatingistheirsupplychains.Bydigitalizingthewaygoodsaredesigned,produced,soldanddelivered,retailersstandtobenefitfromoperationalefficiencyaswellasnewrevenueopportunities,competingmoreeffectivelyinadigitalworld.

Digitalizationcanenableinventoryleveltrackingandlocationtracking―justafewofthemanybenefits.

https://www.fungglobalretailtech.com/research/deep-dive-iot-retail-digitalizing-brick-mortar-stores/

https://www.fungglobalretailtech.com/research/deep-dive-overview-digitalization-apparel-supply-chain/

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DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comSimicChanSeniorResearchAssociate

HongKong:8thFloor,LiFungTower888CheungShaWanRoad,KowloonHongKongTel:85223004406London:242-246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988NewYork:1359Broadway,18thFloorNewYork,NY10018Tel:6468397017FungGlobalRetailTech.com

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Deep Dive: Retail X Factor— Supply Chain - Deborah Weinswig · analytics in one central system. The three key elements needed to transform the supply chain: optimization, speed