When you think of retail, you think of shoppers stepping into a storefront, or browsing products online — the B2C of commerce. But new data released from alternative SME finance player C2FO is lifting the veil on the B2B side of retail. As an industry enduring a massive paradigm shift, the supplier chain — and retailers’ suppliers — are now critical components of a successful business, C2FO’s report found.
According to the survey, three-quarters of procurement executives in the retail space say supply chain technology can offer a competitive edge to their business. Businesses in the industry are placing increasing importance on creating strategic supplier relationships as they seek partners able to fulfill a more demanding business climate.
“It’s about the overall experience,” explained C2FO Managing Director Amanda Mathes in a recent conversation with PYMNTS. “A lot of companies are thinking about how you can deliver a more curated experience, and not only in the context of brick-and-mortar, but into the supply chain.”
With consumers demanding an experience — not just products — and heightened online services, these changes in retail trickle all the way down into the supply chain.
“What’s increasing is the importance and awareness [of supply chain technology],” the executive said. “What’s going on in the backdrop of retail is an underlying need for increased agility and speed. This is because retail is facing unprecedented headwinds, so finding innovative ways to think outside traditional brick-and-mortar boxes. It’s really been a topic of interest. Now, how they choose to do that looks different for each retailer.”
Supply chain strategy has become a prominent path in this case, according to C2FO data. Forty-three percent of professionals surveyed said they are planning to invest in supplier collaboration tools as they view vendors as strategic partners and as retailers aim to manage price negotiations and boost margins. An impressive 71 percent said they will be investing more in logistics technologies, while nearly two-thirds said they’re planning an increase in analytics investments.
But while these initiatives are largely focused on providing an enhanced consumer experience, the need for the buyer-supplier experience to be a positive one is also critical if suppliers are going to be able to meet new demands of the industry. According to Mathes, that understanding is impacting the flow of cash between buyer and supplier.
“A growing percentage of [retailers] now view suppliers as true partners, because there is this great level of dependence between retailers and suppliers,” she said. “Having an increased level of activity and collaboration is becoming increasingly important as retailers are looking to lean into these disruptive headwinds.
“They’re requiring a higher level of agility and flexibility,” Mathes continued, “and that need trickles all the way down into the supply chain.”
Supply chain management technologies can accelerate a retailer’s ability to meet new goals, but according to C2FO, adoption of these technologies is limited. More than a third of survey respondents said their businesses are “not very agile” or “not at all agile” when it comes to adopting supply chain technologies, with businesses citing budget limitations, constrained resources and other factors blocking technology adoption ability.
There are other ways retailers can meet the objectives of a modern landscape, however, and they depend on supporting the suppliers, which are facing more frequent cash pressures as they work to live up to performance expectations with their corporate buyers.
“On average it takes about 60 days for a buyer to pay their supplier, and that can be a long time to wait,” she said. “As you change the variables of today’s situation, asking not only to wait 60 days but requiring more out of the the supply chain, that’s really a strain for a lot of suppliers.”
Part of a healthy and effective buyer-supplier relationship, she said, involves ensuring suppliers have the access to cash they need to continue performing at top levels. That could mean facilitating early payment discounts, or it could mean linking suppliers to outside funding.
“We’re seeing a great uptick of suppliers, especially in retail, trying to pull down cash to meet their growing objectives,” stated Mathes.
The paradigm shift retail has endured (and continues to experience) means new pressures and challenges for the industry, and those struggles are felt all down the supply chain. But according to Mathes, these challenges bring new opportunity not only to retailers, but to their suppliers.
“While we’re seeing a significant paradigm shift in retail and increasing operational changes that make it necessary for companies to reposition for success, the cool thing I’m seeing is that these challenges can also be a catalyst for opportunity for retailers to take stock of their business,” she said. “We’re seeing that it’s a good time for leaning in and leaning up, and retailers out there are confident they’re going to emerge as more flexible and agile with supply chains than they ever were. I’d say there is a good silver lining.”