Supply Chain Woes - How Brands and Retailers Can Navigate Disruptions
During the pandemic, many consumers noticed certain products missing from shelves and occasions when stores struggled to re-supply stock for unusual stretches of time. But it’s a credit to retailers, distributors and manufacturers that conditions weren’t worse. It also may obscure the fact that the United States is still very much in the midst of a supply chain crisis.
Perhaps no one feels that squeeze as sharply as smaller, independent c-stores managers and owners. The supply chain crisis has had a domino effect, with labor and material shortages leading to rising costs for both brands and retailers – a huge concern in the c-store space, where margins are small. In addition, CPG brands don’t have visibility into where products are in stock across the fragmented independent c-store market.
We’ve seen these challenges first-hand with both our CPG brand and retail clients, and have come up with a few recommendations. Hint: lean into data!
Stick to Core Products
CPG Brands: Consider a conservative approach: stick to core products. Introducing new products only makes sense if they can be reasonably expected to achieve at least 50 percent distribution across c-stores as compared to core product lines. Additionally, tap into store performance data to strategically distribute products and identify gaps in distribution to convenience stores. Investing only in products that sell ensures that brands leverage the most from their allotted space on c-stores shelves.
Retailers: Focus on the core products that you know sell well. In addition, new product introduction from brands still remains lower than pre-pandemic, and at the store level, introducing fewer new products while supply chain issues remain a problem can help a store weather the storm.
Stock Shelves Carefully
CPG Brands: Target stores with the highest sales potential based on competitive and category product sales. Use this data to prioritize stocking shelves with the largest revenue opportunities.
Retailers: Be mindful of how you stock your shelves. Keep a close eye on underperforming products and review year-over-year and monthly velocity trends to determine what to stock and at what volume.
Run Strategic Promotions
CPG Brands and Retailers: Leverage promotions and volume-based discounts. Running promotional programs allows brands to push products they know have the largest revenue opportunities. For retailers, participating in brand-funded promotions allows them to stay price competitive amongst rising costs.
Understand Labor Constraints
CPG Brands and Retailers: Plan for increased labor costs and shortages across the supply chain. As c-stores must stay competitive in hourly wages, retailers may need to raise prices in order to offset the resulting spike in operating costs. In the meantime, lean on programs that require minimal resources and a low labor lift, but show a high return on investment.
Supply chain challenges are universal, and projections suggest that they are here to stay for the foreseeable future. But with the advantage of data solutions and a partner such as Skupos, actionable strategies for c-stores and independent retailers are available that can help mitigate those challenges.