Shortening the impact of retail shortages – from the capacity crunch to raw material and labour

by Christophe Pecoraro, Managing Director, PFS Europe
By by Christophe Pecoraro, Managing Director, PFS Europe

Amid a sea of supply chain disruptions and challenges for the retail sector, the word “shortages” keeps ringing over and over. Whether that be a shortage of labour deriving from a perfect storm of Brexit and COVID-19, or a shortage of warehouse infrastructure to keep up with pandemic-fuelled growth in online retail. Experts at real estate advisory firm, Colliers, report that the take-up for large industrial distribution warehouses has increased to record annual levels – with only 18.1m square feet of available industrial space left for firms around the UK currently.

This capacity crunch alone is enough to contend with, but when combined with rapidly diminishing labour and raw material shortages, it is quickly wreaking havoc and placing additional pressure on an already strained industry. New data has revealed that the UK’s retail industry lost 89,000 jobs in the second quarter of 2021 compared to the same period a year ago, due to reduced high street footfall, vacant stores, and competition for jobs in other sectors, such as hospitality.

Meanwhile, a scarcity of materials such as plastic, paper and wood, continues to disrupt the global supply chain. So, how exactly can brands navigate the retail landscape in 2022 – not only keeping their heads above water but focusing on growth, when resources are tighter than ever?

Repurposing existing resources

The first option when faced with a shortage of warehouse space for growing eCommerce demand, is to look at existing infrastructures and ensure they are being fully optimised. Brands must look beyond a centralised warehouse model, considering utilising existing physical store spaces that may have become redundant or that have the capacity to work smarter. With the right order management system and picking technology, brands can transform their brick-and-mortar sites into multi-node distribution facilities – fulfilling the needs of both in-store and online shoppers.

Even for brands that do have the warehouse space, with skyrocketing rent prices and hiking consumer orders to fulfil, it’s vital to ensure it’s being maximised. This can be achieved by ensuring that the warehouse is well equipped with the right technology and processes such as the implementation of automated storage and retrieval systems (AS/RS). This will ensure the smooth flow of goods in and out when the warehouse is full to the brim.

Cloud-based order fulfilment picking solutions will also prove valuable here. These flexible order picking solutions can be easily integrated within existing systems and can help increase distribution efficiency, by not only speeding up the picking process but increasing picking accuracy.

But what happens when existing space is all maxed out?

Ironically, temporary fulfilment centres can offer brands a more permanent solution to this chronic lack of supply. Pop-up distribution centres (pop-up DCs) can be used as an alternative to investing in scarce – and costly – warehouse space. Due to their flexible nature, pop-up distribution centres can be quickly and easily implemented, providing a cost-effective option in the face of rising costs elsewhere.

Overcoming a diminishing worker pool

Recruitment can be challenging with so much competition within the hospitality industry, so again it comes down to optimising existing resources.

Retailers and brands should consider providing shop assistants – who may be experiencing less high street footfall – with the technology to fulfil online orders from their stores. By enabling a cloud-based omnichannel solution, you can effectively direct retail staff through the pick/pack/ship processes.

In the warehouse, implementing a robust Distributed Order Management (DOM) system to coordinate and take out the manual labour of locating stock – can also free up employee time and boost productivity. An advanced DOM system works by ensuring your order management system (OMS) can divert orders to the appropriate inventory pool – depending on delivery address and product type. This will have a significant impact on your ability to keep orders moving to meet consumer demand, despite a shrinking workforce.

Whilst not the right fit for every brand, in terms of cost-effectiveness and efficiency, another option is to turn to automation and robotics-powered solutions.  These tools can take on a range of time-consuming – yet essential – tasks historically carried out by human workers. By implementing automation to perform these often-repetitive tasks, your intelligent workforce is then freed up to support with tasks that build brand loyalty.

Making shortages visible to enable a response

When facing a shortage of materials, this can feel impossible for brands to handle. Recently, the UK was hit with a shortage of cosmetics and skin care products due to a major drop in the availability of a key chemical, ethoxydiglycol, found in a host of household items as well as medications. As a result, prices of the compound increased almost tenfold, rising from £12/kilo to £103.

There are, however, measures to put in place that can reduce the impact of such a shortage. For example, by having full visibility of stock levels across all retail channels, brands can limit the problems that may occur when it comes to maintaining brand loyalty. Equipping customer service agents with up-to-date information and insights into these shortages and the impact this could have on delivery timescales is vital to managing customer expectations.

Whilst shortages – in all their various forms – make a very real threat to the profitability of businesses across the globe, they don’t necessarily mean getting caught short. For the retailers and brands that execute foresight, implementing the strategies and technologies that enable them to roll with the punches, these shortages present an opportunity to distinguish themselves from their competitors, aiding growth in the long run.


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