The rapid transformation of the retail and consumer goods (CG) industries over the last five years will accelerate over the next decade, hastened by the twin forces of evolving consumer needs and constant digital disruption. These trends are creating an imperative for businesses to understand their customers so they can create personalized experiences and drive positive brand sentiment. The automated supply chain, marked by the collaboration between all its members, will have a key role to play in meeting this imperative. We refer to the practice of connecting all the partners in the supply chain through technology to optimize business outcomes as Collaborate 4.0.

This point of view analyzes the latest consumer trends and preferences, and outlines the opportunities to optimize the supply chain in order to serve the modern shopper.

Keeping up with next-gen consumers

Millennials and Gen-Z, two generations born after 1997, are shaping the next-generation shopping trends. They want personalized experiences that are quick, easy, and fun, and prefer digital wallets and Near Field Communication (NFC) payments over credit card payments (Figure 1). These two groups differ in preferences: millennials are more price sensitive and value-driven, while Gen Z is more focused on a brand’s social responsibility, and less tolerant of connectivity issues and inferior service.

The retailers of the future will need to satisfy their demands by deploying more conversational chat-bots and Augmented Reality-Virtual Reality (AR/ VR) for personalized experiences. They will have to support digital wallets, and adopt other technologies that enhance the customer experience.¹

Current digitization efforts are not enough

Retail and CG companies are scrambling to win the wallet share of millennials in ecommerce, but neither have strong ROIs to show for it. In the absence of meaningful loyalty programs, CG companies are falling short in reaching their customers. While some brick-and-mortar retailers have found success with white- and private-label brands, others are haunted by the perpetual bankruptcies, and store closings that plague the industry. Leading brands are shutting down stores by the hundreds and laying off employees by the thousands.

Given this uncertainty, retailers and CG businesses need to act quickly and step up their digital transformation or risk being swallowed by digital-native companies with an appetite for ambitious growth and ever-expanding areas of competition.²

The retail and CG of the future

To know what it takes to give consumers what they want, let’s consider a royal case study (Figure 2):

Within 24 hours of Meghan Markle showing up at Queen Elizabeth’s annual Christmas lunch in a self-portrait dress, the dress sold out.³ Social media allowed consumers to identify an influential celebrity and what she was wearing, driving demand to spike beyond the retailers’ ability to respond. This is a classic retail and CG Collaboration 4.0 use case, as a smart retailer using the latest machine learning technology could have spotted an opportunity and sent demand signals to the manufacturer who would have immediately shipped the dresses to the retailer. If the demand is overwhelming, the dress-maker can prioritize completing the 3D-printing, then manufacture the dress at a nearby facility. The customer who visits the retailer showroom sends demand signals for her desired customizations – a typical consumer insight which is critical in converting a consumer into a shopper. The manufacturer follows the same 3D-printing process and manufactures the dresses quickly, shipping them the same day to the retailer. This “Mock Up to Mall in a Month” is a win-win-situation for the retailer, CG manufacturer, and the customer.

Collaborate digitally!

While the norm today is for CG companies and retailers to operate independently rather than collectively in their best interest, Collaboration 4.0 is nonetheless catching on. Indeed, managers are seeing the benefits of data sharing, with a single version of the truth across the consumer value chain that paves the way for operational, tactical, and strategic collaboration between all partners in the ecosystem.

If retail and CG businesses collaborate throughout the supply chain, they stand to realize their shared goals: higher sales, cost savings, optimized processes and systems, and happy customers (Figure 3).

The elements of a Collaboration 4.0 platform include:

Strategic collaboration: Partners co-innovate in product development, leverage joint strategic volume and market planning, and participate in joint supply chain improvement activities. They also swap customer insights including shopping behavior.

Tactical planning: Partners share planning, scenarios, and forecast information, along with a collaborative sales and operations planning process, deploying capable-to-promise checks across the entire value chain.

Operational execution: Partners share inventory location, tracking, and automated replenishment, powered by seamlessly optimized joint logistics.

Supply chain in the era of disruptive technology

New technologies have begun to disrupt the supply chain, offering a plethora of opportunities across the retail and CG value chain to both, enhancing the consumer experience and improving collaboration between supply chain partners. Figure 4 shows the latest technology trends at each stage of the supply chain.

As Millennials and Gen-Z have set the bar high for customer experiences, it is imperative that businesses learn to collaborate with every member of their value chain (Figure 5) to meet the evolving needs of their customers while gaining actionable insights into their desires.

In order to succeed, retail and CG businesses will need to develop a collaborative supply chain that integrates data from customer-facing systems, such as point-of-sale systems and websites, and manufacturing, delivery, procurement, and supplier systems, to effectively deliver a tailored and differentiated experience to the next generation of consumers.

References

¹. https://www.spscommerce.com/blog/how-can-retailers-and-supply-chains-serve-the-millennial-shopper/

². https://www.youtube.com/watch?v=PirfuKDdR9c

³. https://www.today.com/style/meghan-markle-s-self-portrait-dress-sold-out-1-day-t120411

Johnathan Thomas

Manager, Strategy and Transformation Consulting Practice, Wipro Limited

With about 10 years of experience in the retail and consumer goods vertical, Johnathan specializes in business operations and change management. He holds an MBA from Northwestern University's Kellogg School of Management and is a graduate of Wipro's Global 100 Leadership Development Program.

Swetha Panyam

Senior Consultant, Strategy and Transformation Consulting Practice, Wipro Limited

Swetha has more than 10 years of experience in supply chain consulting, working with retail and consumer goods businesses throughout Asia Pacific & Australia, North America & Europe. A business consultant with Wipro Technologies for the past ten years, Swetha focuses on supply chain analytics, including demand planning and forecasting, and order to cash processes. She holds an MBA from Great Lakes Institute of Management and AACSB Accredited MBA from Illinois Institute of Technology, Chicago.

Get in touch: global.consulting@wipro.com

The authors would like to thank Sameer Shukkla for his contribution to this point of view.