Tour de Supply Chain: Retailers & E-tailers

It seems that the British public is getting back on their bikes in startling numbers. Last year alone, we cycled an impressive 3.5 billion miles; 6.3% more than in 2015. However, as the UK Government forges ahead with a £1.2 billion project set to double the uptake of cycling by 2025, it seems that further growth is on the horizon. The question is: How can retailers gear up their operation to capitalise on this accelerating market?

Cycling in the UK peaked in 1949 as the nation covered over 14 billion miles on two wheels. As the cost of car ownership fell and access to public transport improved, the use of bicycles crashed. However, in more recent times, cycling has undergone a resurgence. Powered by a cluster of factors including Team GB’s Olympic success and an ever-increasing consumer focus on health, the cycling industry has been cranked back to life!

With no sign of this growth slowing, businesses now face a huge opportunity to profit. But what can they do to maximise sales opportunities while minimising supply chain costs and exposure to risks?

Omni-channel retailing: a gear shift in complexity

The supply chains that support today’s leading cycling brands have been redefined by changing consumer behaviour. E-commerce has many variants and as more and more of us shop online, cycling businesses have had to respond accordingly. Today, even the most traditional of bicycle retailers have successfully established online shops to bolster their existing retail landscape. That said, there are undoubtedly more stand-alone web shops today than there were 5 years ago.

As more and more bicycle businesses continue to explore the ever-expanding omnichannel environment, maintaining high levels of availability I now of paramount importance. Given the transparency of pricing on the web, consumer demand in E-tail is far more erratic in comparison to traditional retail outlets. After all, regardless of where the customer is shopping in-store or online, stock-outs directly result in lost sales and disappointed customers. Consequently, businesses must optimise their inventory in order to ensure the right stock, in the right place, at the right time.

Product lifecycles: the complete criterium

Maintaining consistently high levels of availability across complex product assortments can prove difficult at the best of times. However, in the cycling industry, this challenge is only further exacerbated by the sheer number of new product introductions and ever-shortening product lifecycles.

Put simply, failure to manage product lifecycles effectively can come at great cost to the business: both in terms of lost sales due to poorly introduced new items as well as unnecessarily tying valuable working capital in obsolete stock that won’t sell!

As suppliers further up the chain release new product updates and variations as well as entirely new product lines, retailers have little choice but to add these items to their assortments. Even so, as these assortments grow, businesses must invest in tools and technologies that provide the required insight to make informed inventory decisions. Only then, can retailers put in place the right strategies to ensure new items are introduced effectively while end-of-life items are phased out with minimal financial impact to the business.

Seasonality: managing the fair weather cyclist

Inventory challenges are not limited to new product lines and products at the end of the product lifecycle, even mature items can prove problematic. Given that every item is likely to have its own individual seasonal demand profile with different sales peaks throughout the year, retailers can easily find themselves dangerously exposed to seasonal fluctuations in demand.

For instance, while a long, hot summer is likely to stimulate high demand for new bikes as people make the most of the good weather, a little bit of rain could seriously hamper sales. Managed effectively, seasonal influxes can provide a welcome boost to sales. Yet, managed badly, these surges in demand can result in high levels of excess stock and, consequently, waste.

As a result, retailers must remain responsive to seasonal influxes and manage inventory levels accordingly. Through encompassing seasonal uplifts into the demand planning process, retailers optimise inventory levels before, during and after a season influx.