Andrew Hogenson, global head of consumer goods, retail and logistics with Infosys Consulting, offers insight into the big-box retailing landscape when the pandemic subsides, and how retailers will have to adjust.
Shipping delays are rampant at the moment, caused by congestion at ports and in the domestic transportation system, which in turn is the result of both increased consumer demand and the physically limiting effects of the coronavirus pandemic. Meanwhile, retailers are being forced to cope with the growth of e-commerce, which has created “a whole different environment” when it comes to planning, shipping and receiving of goods, Hogenson says. All of those factors “have put them behind the eight ball” in terms of their ability to respond to real-time demand.
Labor shortages are becoming a serious problem, even at a time of persistent unemployment caused by the economic effects of the pandemic. More than a million open positions are projected for distribution centers in the coming year, Hogenson says. “Less labor, social distancing and illnesses are all impacting the capacity to flow goods from overseas, through facilities and out to people.”
As the pandemic loosens its grip on the economy, there’s the possibility of a return to the extremely low unemployment levels of 2019. At the same time, businesses are coping with the financial implications of an increase in the minimum wage for warehouse workers and drivers.
Also undergoing dramatic change is the nature of retail distribution networks. Smaller distribution centers are popping up in urban centers as a means of getting product to online shoppers more quickly. That’s a marked contrast from a system that has relied on fulfillment from huge regional D.C.s. “With the need for same- and next-day delivery,” Hogenson says, “retailers don’t have the ability to transport product halfway across the country.”
Timely, incisive articles delivered directly to your inbox.