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Rise of online means 'upheaval' for supply chains

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Posted on 29/05/2013 by Wayne Brophy FCILT

The next few years are likely to be filled with upheaval for the supply chain manager, as the rise of online shopping changes the landscape of the retail sector.

A study by the Centre for Retail Research, entitled "Retail Futures 2018", revealed that over the next five years more than 60,000 shops will be closing down.

Online retail will increase from 12.7 per cent of the market in 2012 to 21.5 per cent by 2018, pushing down demand for high street stores.

With operating costs rising faster than consumer spending in the retail sector, it is no surprise that total store numbers will drop by 22 per cent from 281,000 to 220,000 by 2018.

It is expected that over the next five years, 164 major or medium-sized companies will go into administration. Retailers with a strong web offering now only need 70 high street stores to create a national presence. This is much lower than the 250 required in the mid-2000s.

Wales, northern England and the Midlands will be the worst hit locations for closures, further enforcing the void between the north and south in the UK.

Unsurprisingly, this will impact upon retail supply chain networks. The significantly lower density of stores in certain areas will push up the cost of delivery.

This will affect the ability of certain firms to be competitive, particularly smaller distribution companies.

However, the Centre for Retail Research believes the decline of the high street is reversible. True, the UK is "facing a crisis", they explain in their report, but the power lies with those in the sector to make a change.

"Retailing and retailers will either make clear strategic decisions that permit online retail to coexist with other retail channels in a multichannel world, allowing bricks and mortar retailers to transform themselves, or, by avoiding making these decisions, multiple retailers will disappear or be so mortally wounded that a large minority of business categories become dominated purely [by] online retailers," the report reads.

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