With commodity prices on the rise, companies in the fast-moving consumer goods (FMCG) space have been left with no option but to increase prices on goods as they scramble to restore some measure of normality to the market.Covid-19 unleashed a global supply chain crisis for many companies, regardless of size. Shopping behaviour changed radically as consumers f locked to online platforms, requiring the implementation of complex reverse logistics systems.Supply chain experts agree that for the FMCG market the pandemic highlighted the need for manufacturers to diversify supply chains to minimise risk, but also address cost.Analysis by Bain & Company indicates that a complete metamorphosis of retail as we know it is required. It states that over the next few years, retailers will need to engage in waves of consolidation, simplification, and dramatic cost-cutting just to stay in the game.It is a complex environment, considering that going forward the world is increasingly looking at scenarios where everything will be available for purchase anytime, anywhere, using anything from image recognition to voice technology to traditional brick-and-mortar stores.A report by Transpor t Intelligence (Ti) highlights the profound transitional period the retail market is in.“The future of retailing and the demands it has on logistics services is one of the most important questions for supply chain decision-makers today. As the shift of sales online continues across the retail sector, the need for logistics structures that support more f lexible, faster and automated fulfilment operations will increase, helping to drive growth,” reads a report.In 2021, logistics services provided to the retail sector were valued at over €2 trillion, with food, beverage and small-scale construction and homeware logistics among the most valuable retail subsectors.“Retailing is in a period of remarkable change. A superficial examination of the data would suggest that e-retailing is taking over the market and that conventional retailing will disappear. However, this is unlikely. Yet there is little hard evidence on which to base any assessment of what retailing will look like, even in the short term,” according to the report.And while it is unclear if e-retail and physical shops will continue to exist in parallel, or if either e-retail or physical shops will change what they do and how they do it, what should be clear is that all of this is of great concern to logistics service providers in the FMCG sector because it injects considerable uncertainty into an important part of their business.“One of the most salient issues faced by logistics service providers seeking to work in the retail segment is uncertainty. The size and the structure of both the physical store and the e-retail market segments are highly uncertain, indeed are changing yearly. This makes investment, operational systems design, and business model design problematic for both.”
