The Future of Supply Chain and Retail
September
2020
Out with the old, in with the new: how Covid-19 has altered the future of supply chain
If Covid-19 has proven one thing for businesses and the supply chain, it is that we live in a world of the never-normal. What this means is that, while Covid has been and remains the greatest disruptor within the supply chain, it will one day be replaced by another disruptor, such as Brexit or climate change.
A lack of flexibility and resilience within the supply chain meant that businesses were unable to react in the immediate aftermath of Covid-19 and its various lockdown protocols. This led to shortages in essential products such as food, PPE and utilities, which only heightened the strain on both people and businesses.
This has forced many businesses to reassess their priorities within the supply chain. Where efficiency and cost reduction were once king, a supply chain with greater resilience and agility is being seen as a better alternative. This is the future of supply chain. The only question for businesses is how best to achieve this.
Expanding horizons
For businesses looking to achieve greatness in their supply chain, how they use algorithms and AI will be critical. Currently, businesses commonly use algorithms in areas such as network design, inventory optimisation, demand forecasting, pricing, capacity planning and sourcing.
However, they are typically in one narrow area of the supply chain and do not take into account the end-to-end nature of the supply chain, which consists of connected processes.
While using algorithms in this way can provide companies with good results within their supply chain, its narrowness blocks them from achieving great results, which can prevent businesses from expanding on their capabilities.
To improve this, companies need to change how they implement their algorithms across the supply chain. The techniques that they use must be holistic and available to all supply chain practitioners in the organisation, regardless of their skill level or the scope of their job function.
This, of course, is easier said than done but there are some principles that companies can adopt if they want to transition their supply chain from one which is simply good to one that is great. These principles include modelling the entire end-to-end supply chain (with the digital twin), transitioning to prescriptive recommendations, augmenting the knowledge worker, scenario planning and leveraging external data to drive outside-in thinking.
A test run for the future
Companies that want a holistic view of their supply chain should look no further than digital twin technology. Powered by analytics, this technology allows companies to plan end-to-end supply chain strategies in a virtual format, before putting it into practice in the real world.
This enables them to do two things. Firstly, it allows them to uncover certain pain points in the supply chain and resolve these before they become both real and costly disruptions. Secondly, they can prepare multiple contingency plans in case of unexpected disruptions, such as Covid-19, creating a supply chain with greater flexibility and resiliency.
While good algorithms look at a specific portion of the supply chain (such as the factory only, or the warehouse and its connections), great algorithms work off the digital twin and see the interconnected nature of supply chain decision making.
Using the digital twin, companies are provided with recommendations and solutions to their supply chain strategy, informed by data. However, more than this, they are provided with the underlying rationale behind why one alternative is better than another, and clear trade-offs to make a business justification for a specific course of action.
However, despite the capabilities of the technology, companies must be wary of using it to replace human decision makers entirely. Its power lies in the technology’s ability to augment human decision-making, by giving them options and trade-offs.
As a result, there is an increasing demand for the multidisciplinary employee, who has an engineering or mathematical background but also has a deep understanding of the business, is creative and possesses great communication skills. Great algorithms support this symbiotic relationship between man and machine, which will be a defining one for businesses looking to succeed in the never-normal world we live in.
Recipe for success
For this technology to work as effectively as possible, businesses need access to reliable data both internal and external. This data can then be used to feed the algorithms that power the digital twin, ensuring that the insights being generated are as accurate and efficient as possible. When it comes to training algorithms, the more cleansed and harmonised data the system has to learn from, the better.
As a result, it is important that businesses ask questions such as:
- How do we get both internal and external data cleansed, harmonised and in a form where we can make holistic decisions?
- How do we then leverage internal and external data to get greater value from our current assets and improve our products to grow market share profitably?
- How can data drive more insightful decision making about future options and scenarios?
With these capabilities, businesses can create a supply chain which is not just tailored towards efficiency and cost reduction, but one which is cross-functional. This will enable businesses to achieve their objectives and goals, satisfy their customers and create a cleaner, greener supply chain. With legislation such as fines for UK businesses guilty of deforestation in their supply chain, the latter will be a vital component in the future of supply chain.
We all knew that technology would play a key role in the future of the supply chain – that is something of a given in today’s world. However, Covid-19 has truly demonstrated to businesses how this technology needs to be used and for what purpose.
The ongoing disruptions caused by the pandemic, the impending turmoil of Brexit and who knows what else lurking around the corner, mean that businesses must be prepared for anything at any given moment. Technology such as AI and machine learning, applied to solutions such as the digital twin, will enable this flexibility and allow businesses to strive in this world of the never-normal.
by Vikram Murthi, Vice President, Industry Strategy, LLamasoft
Out with the old, in with the new: how Covid-19 has altered the future of supply chain
If Covid-19 has proven one thing for businesses and the supply chain, it is that we live in a world of the never-normal. What this means is that, while Covid has been and remains the greatest disruptor within the supply chain, it will one day be replaced by another disruptor, such as Brexit or climate change.
A lack of flexibility and resilience within the supply chain meant that businesses were unable to react in the immediate aftermath of Covid-19 and its various lockdown protocols. This led to shortages in essential products such as food, PPE and utilities, which only heightened the strain on both people and businesses.
This has forced many businesses to reassess their priorities within the supply chain. Where efficiency and cost reduction were once king, a supply chain with greater resilience and agility is being seen as a better alternative. This is the future of supply chain. The only question for businesses is how best to achieve this.
Expanding horizons
For businesses looking to achieve greatness in their supply chain, how they use algorithms and AI will be critical. Currently, businesses commonly use algorithms in areas such as network design, inventory optimisation, demand forecasting, pricing, capacity planning and sourcing.
However, they are typically in one narrow area of the supply chain and do not take into account the end-to-end nature of the supply chain, which consists of connected processes.
While using algorithms in this way can provide companies with good results within their supply chain, its narrowness blocks them from achieving great results, which can prevent businesses from expanding on their capabilities.
To improve this, companies need to change how they implement their algorithms across the supply chain. The techniques that they use must be holistic and available to all supply chain practitioners in the organisation, regardless of their skill level or the scope of their job function.
This, of course, is easier said than done but there are some principles that companies can adopt if they want to transition their supply chain from one which is simply good to one that is great. These principles include modelling the entire end-to-end supply chain (with the digital twin), transitioning to prescriptive recommendations, augmenting the knowledge worker, scenario planning and leveraging external data to drive outside-in thinking.
A test run for the future
Companies that want a holistic view of their supply chain should look no further than digital twin technology. Powered by analytics, this technology allows companies to plan end-to-end supply chain strategies in a virtual format, before putting it into practice in the real world.
This enables them to do two things. Firstly, it allows them to uncover certain pain points in the supply chain and resolve these before they become both real and costly disruptions. Secondly, they can prepare multiple contingency plans in case of unexpected disruptions, such as Covid-19, creating a supply chain with greater flexibility and resiliency.
While good algorithms look at a specific portion of the supply chain (such as the factory only, or the warehouse and its connections), great algorithms work off the digital twin and see the interconnected nature of supply chain decision making.
Using the digital twin, companies are provided with recommendations and solutions to their supply chain strategy, informed by data. However, more than this, they are provided with the underlying rationale behind why one alternative is better than another, and clear trade-offs to make a business justification for a specific course of action.
However, despite the capabilities of the technology, companies must be wary of using it to replace human decision makers entirely. Its power lies in the technology’s ability to augment human decision-making, by giving them options and trade-offs.
As a result, there is an increasing demand for the multidisciplinary employee, who has an engineering or mathematical background but also has a deep understanding of the business, is creative and possesses great communication skills. Great algorithms support this symbiotic relationship between man and machine, which will be a defining one for businesses looking to succeed in the never-normal world we live in.
Recipe for success
For this technology to work as effectively as possible, businesses need access to reliable data both internal and external. This data can then be used to feed the algorithms that power the digital twin, ensuring that the insights being generated are as accurate and efficient as possible. When it comes to training algorithms, the more cleansed and harmonised data the system has to learn from, the better.
As a result, it is important that businesses ask questions such as:
- How do we get both internal and external data cleansed, harmonised and in a form where we can make holistic decisions?
- How do we then leverage internal and external data to get greater value from our current assets and improve our products to grow market share profitably?
- How can data drive more insightful decision making about future options and scenarios?
With these capabilities, businesses can create a supply chain which is not just tailored towards efficiency and cost reduction, but one which is cross-functional. This will enable businesses to achieve their objectives and goals, satisfy their customers and create a cleaner, greener supply chain. With legislation such as fines for UK businesses guilty of deforestation in their supply chain, the latter will be a vital component in the future of supply chain.
We all knew that technology would play a key role in the future of the supply chain – that is something of a given in today’s world. However, Covid-19 has truly demonstrated to businesses how this technology needs to be used and for what purpose.
The ongoing disruptions caused by the pandemic, the impending turmoil of Brexit and who knows what else lurking around the corner, mean that businesses must be prepared for anything at any given moment. Technology such as AI and machine learning, applied to solutions such as the digital twin, will enable this flexibility and allow businesses to strive in this world of the never-normal.
by Vikram Murthi, Vice President, Industry Strategy, LLamasoft
Five ways to create a better world through supply chain
Eradicating forced labour in supply chains
As supply chains become increasingly complex and interconnected, the risk of modern-day slavery being present within these global networks continues to escalate.
As our global networks deliver the products and services we depend on every day, it is crucial consumers know the paths they took to our homes and businesses. Too often, this journey involves slave labour.
It is a tragedy that millions of people fuelling today’s supply chains face labour rights violations, unsafe working conditions, discrimination and corrupt sourcing processes. As William Crandall PhD writes in SCM Now magazine, “If you are like many supply chain professionals, you wonder about the corporate social responsibility and ethical standards in the far tiers of your supply chain, particularly those in developing countries. You hope people are receiving adequate wages, have a safe environment in which to work and are given decent supervision. Yet, there is an uncomfortable reality that must be acknowledged: slavery is alive and well in far too many supply chains.”
While there isn’t an official definition of a modern-day slave, the International Labour Organization (ILO) describes it as work that is “performed involuntarily and under the menace of any penalty.” It also refers to situations in which people are coerced to work through the use of violence, intimidation, manipulated debt, retention of identity papers or threats of denunciation to immigration authorities. The ILO states that forced labour in the private economy amounts to $150 billion in corrupt profits each year.
A recent Walk Free Initiative report found that 40.3 million people live in conditions of modern-day slavery. Of these victims, 18 per cent of adults are labouring in construction, 15 per cent in manufacturing and 11 per cent in agriculture or fishing. Slavery is particularly rampant in industries with severe downward pricing pressures, as cost-cutting often involves less pay, disregarded safety procedures and imprisonment through withheld identification or documentation.
As Crandall writes – and as ASCM is committed to seeing to fruition – there are means for putting an end to it. Supply chains have the power to create a better world, and industry professionals must work together to tap into that potential. The way forward will depend on these industry leaders meticulously ensuring the integrity of their networks, methodically mapping their companies’ entire supply chains, and maintaining codes of conduct that are both fully effective and in force.
The ASCM Foundation is mobilising supply chain communities, skilled leaders and visionary partners. Together, we are committed to solving this critical problem that affects so many lives. Learn more about all of the initiatives the foundation is pursuing and how you can help at ascm.org/making-an-impact. Please join us in harnessing the power of supply chains to create a better world by eradicating modern-day slavery.
Abe Eshkenazi, CSCP, CPA, CAE, is CEO of the Association for Supply Chain Management (ASCM). Learn more about how ASCM is working to create a better world through supply chain at ascm.org.
by Abe Eshkenazi, Chief Executive Officer, Association for Supply Chain Management (ASCM)
Modernising third-party cyber-risk management: whose risk agenda are you trying to satisfy?
Managing third-party cyber-security risk in today’s highly connected businesses isn’t easy. Security and risk management teams are pulled in competing directions as they respond to the demands of regulators – demands echoed by the board – to comply with legislation. Simultaneously, they need to monitor and mitigate emerging risks that don’t appear on a regulator’s checklist but could have a critical impact on the business.
The tension between competing risk agendas stretches in-house resources to breaking point and raises the possibility that, when new risk surfaces in the supply chain, the business is busy looking the other way.
Part of the problem is measurability. It is easier to understand, measure and demonstrate compliance with regulations than it is to understand the complex issues of devolved cyber-risk in the supply chain.
It is hard to put a value on the actions that prevent a breach from happening in the first place, whereas it is simpler to point to the penalties avoided when regulatory compliance is achieved. This can lead organisations to focus attention on the compliance side of the balance rather than on the deeper challenge of identifying vulnerabilities in the extended supplier ecosystem.
As a result, actions do not always genuinely reduce risk for the organisation. Also, an unhelpful assumption remains that some supply chain cyber-risk, especially that coming from the long tail outside an organisation’s tier one vendors, is inevitable.
Attempts to resolve the tension and make third-party cyber-security management more quantifiable have only partly succeeded. Security ratings, for example, which deliver an objective benchmark of a vendor’s security posture, are helpful to a point. But they need to be viewed in the context of the vendor’s relationship to your business – a vendor might achieve a relatively good rating, but if there is zero tolerance in the business for that risk, good might not be good enough.
And it is also worth considering that even if a partner has a good cyber-security rating, it doesn’t mean they won’t get breached, in the same way that compliance with regulations is no guarantee of protection. So what is the way forward? How can organisations gain genuine, actionable insight into the risk in their supply chain while also satisfying regulatory requirements, using the resources they have? It’s a case of knowing where to look and what to look for.
Where to look: beyond tier one vendors
The issue most businesses face when managing supply chain risk is scale. With thousands of existing vendors and new ones coming onboard every week, the size of the task is immense. That’s when businesses settle for the theory that the biggest vendors represent the biggest risk and devote resources to assessing and monitoring tier one suppliers.
However, this is a dangerous assumption. The aggregate risk from vendors outside tier one more than outweighs those big suppliers. In fact, attackers know that big brands have better security; they are much more likely to target the lower-tier, less-well-defended partners that can give them a route into the targets they’re looking for.
Yet those lower-tier partners are typically relegated to annual point-in-time compliance questionnaires, leaving a significant blind spot between assessments.
A classic example of this third-party risk and scale problem was the 2017 NotPetya attack. In this attack the servers of Ukrainian software company Linkos Group, vendors of accounting package M.E.Doc, were hacked and trojan software injected. This went on to infect M.E.Doc customers, ultimately crippling multinational companies, from shipping giant Maersk to food producer Mondelēz and many more.
At the time this attack was assumed to be highly sophisticated and a situation where the victims could have done little to prevent it. But that is not wholly true. The attack was bold, but not complex. Where the real danger emerged was in the fact that Linkos was simply not important enough in any of those large companies’ hierarchy of suppliers to be the focus of cyber-risk scrutiny. If it had been, a simple scan likely could have identified its security failings and the potential risk they posed.
Scaling a risk programme to cover the long tail of the vendor ecosystem and flag material risks that may have previously been beneath the radar has to be done in an intelligent way, acknowledging that information overload is a key problem.
The data is obtainable and automated systems can gather it, but its sheer volume is unmanageable. If you have a team of six risk managers and an ecosystem of 10,000 vendors, a 100-page report on each vendor is almost as bad as no data at all. Add to this the high volume of false positive alerts generated by automated systems and the problem becomes even more untenable.
Ultimately, data must be viewed and prioritised through a lens that takes into account the business’s risk appetite and sector-specific risks, the frameworks and regulations with which it must comply, and the importance and extent of each vendor’s links to the organisation. Here, knowing what to look for is key to identifying and prioritising risk.
What to look for: trends and exceptions
It is not possible to analyse the detail of absolutely everything that is happening through the vendor ecosystem. Instead, identify the important emerging trends and exceptions and focus on what they mean for your business.
The first step is to identify a set of critical factors and key indicators, including business-specific issues and regulatory requirements. This analysis can be used to carry out thematic investigations across the ecosystem – informed by external threat detection datasets – to identify where risk lies.
The analysis can then be mapped to the organisation’s frameworks and reporting requirements, so the data has context for the business. The results make sense of the data and generate insights on how risk alerts can be triaged, and false positives eliminated. This means that actions can be prioritised so they focus resources where they will have greatest impact – both in terms of reducing organisational risk and satisfying compliance demands.
This approach, which looks beyond tier one vendors and analyses threat data in context closely aligned to the business, is key to modernising third-party cyber-risk management and making it achievable by more businesses.
This article was first published in teiss.co.uk [https://www.teiss.co.uk/modernising-third-party-cyber-risk-management-whose-risk-agenda-are-you-trying-to-satisfy/]
Ewen O’Brien, Head of Third-Party Managed Cyber Risk Service, BlueVoyant
Modernising third-party cyber-risk management: whose risk agenda are you trying to satisfy?
Managing third-party cyber-security risk in today’s highly connected businesses isn’t easy. Security and risk management teams are pulled in competing directions as they respond to the demands of regulators – demands echoed by the board – to comply with legislation. Simultaneously, they need to monitor and mitigate emerging risks that don’t appear on a regulator’s checklist but could have a critical impact on the business.
The tension between competing risk agendas stretches in-house resources to breaking point and raises the possibility that, when new risk surfaces in the supply chain, the business is busy looking the other way.
Part of the problem is measurability. It is easier to understand, measure and demonstrate compliance with regulations than it is to understand the complex issues of devolved cyber-risk in the supply chain.
It is hard to put a value on the actions that prevent a breach from happening in the first place, whereas it is simpler to point to the penalties avoided when regulatory compliance is achieved. This can lead organisations to focus attention on the compliance side of the balance rather than on the deeper challenge of identifying vulnerabilities in the extended supplier ecosystem.
As a result, actions do not always genuinely reduce risk for the organisation. Also, an unhelpful assumption remains that some supply chain cyber-risk, especially that coming from the long tail outside an organisation’s tier one vendors, is inevitable.
Attempts to resolve the tension and make third-party cyber-security management more quantifiable have only partly succeeded. Security ratings, for example, which deliver an objective benchmark of a vendor’s security posture, are helpful to a point. But they need to be viewed in the context of the vendor’s relationship to your business – a vendor might achieve a relatively good rating, but if there is zero tolerance in the business for that risk, good might not be good enough.
And it is also worth considering that even if a partner has a good cyber-security rating, it doesn’t mean they won’t get breached, in the same way that compliance with regulations is no guarantee of protection. So what is the way forward? How can organisations gain genuine, actionable insight into the risk in their supply chain while also satisfying regulatory requirements, using the resources they have? It’s a case of knowing where to look and what to look for.
Where to look: beyond tier one vendors
The issue most businesses face when managing supply chain risk is scale. With thousands of existing vendors and new ones coming onboard every week, the size of the task is immense. That’s when businesses settle for the theory that the biggest vendors represent the biggest risk and devote resources to assessing and monitoring tier one suppliers.
However, this is a dangerous assumption. The aggregate risk from vendors outside tier one more than outweighs those big suppliers. In fact, attackers know that big brands have better security; they are much more likely to target the lower-tier, less-well-defended partners that can give them a route into the targets they’re looking for.
Yet those lower-tier partners are typically relegated to annual point-in-time compliance questionnaires, leaving a significant blind spot between assessments.
A classic example of this third-party risk and scale problem was the 2017 NotPetya attack. In this attack the servers of Ukrainian software company Linkos Group, vendors of accounting package M.E.Doc, were hacked and trojan software injected. This went on to infect M.E.Doc customers, ultimately crippling multinational companies, from shipping giant Maersk to food producer Mondelēz and many more.
At the time this attack was assumed to be highly sophisticated and a situation where the victims could have done little to prevent it. But that is not wholly true. The attack was bold, but not complex. Where the real danger emerged was in the fact that Linkos was simply not important enough in any of those large companies’ hierarchy of suppliers to be the focus of cyber-risk scrutiny. If it had been, a simple scan likely could have identified its security failings and the potential risk they posed.
Scaling a risk programme to cover the long tail of the vendor ecosystem and flag material risks that may have previously been beneath the radar has to be done in an intelligent way, acknowledging that information overload is a key problem.
The data is obtainable and automated systems can gather it, but its sheer volume is unmanageable. If you have a team of six risk managers and an ecosystem of 10,000 vendors, a 100-page report on each vendor is almost as bad as no data at all. Add to this the high volume of false positive alerts generated by automated systems and the problem becomes even more untenable.
Ultimately, data must be viewed and prioritised through a lens that takes into account the business’s risk appetite and sector-specific risks, the frameworks and regulations with which it must comply, and the importance and extent of each vendor’s links to the organisation. Here, knowing what to look for is key to identifying and prioritising risk.
What to look for: trends and exceptions
It is not possible to analyse the detail of absolutely everything that is happening through the vendor ecosystem. Instead, identify the important emerging trends and exceptions and focus on what they mean for your business.
The first step is to identify a set of critical factors and key indicators, including business-specific issues and regulatory requirements. This analysis can be used to carry out thematic investigations across the ecosystem – informed by external threat detection datasets – to identify where risk lies.
The analysis can then be mapped to the organisation’s frameworks and reporting requirements, so the data has context for the business. The results make sense of the data and generate insights on how risk alerts can be triaged, and false positives eliminated. This means that actions can be prioritised so they focus resources where they will have greatest impact – both in terms of reducing organisational risk and satisfying compliance demands.
This approach, which looks beyond tier one vendors and analyses threat data in context closely aligned to the business, is key to modernising third-party cyber-risk management and making it achievable by more businesses.
This article was first published in teiss.co.uk [https://www.teiss.co.uk/modernising-third-party-cyber-risk-management-whose-risk-agenda-are-you-trying-to-satisfy/]
Ewen O’Brien, Head of Third-Party Managed Cyber Risk Service, BlueVoyant
Trouble at the mall as landlords and tenants ponder mutually assured destruction
Matthew Bailey, Lecturer, Retail History, Macquarie University
“This is not a bluff,” Scott Evans, the chief executive of Mosaic Brands, has said of his threat to permanently close 300 to 500 stores in Australia unless landlords reduce rents.
Mosiac’s network of about 1,300 apparel stores includes Katies, Noni B, Rivers, Rockmans, Millers and Crossroads. With stores shuttered temporarily due to COVID-19 restrictions, it posted a A$170.5 million loss in the year to June.
It and other retailers such as Premier Investments (owner of Just Jeans, Portmans and Jacqui E brands) have reportedly been paying lower or no rent to landlords, on the basis their rents should reflect revenue and landlords should share the pain.
Last week Mosiac’s stalled rent negotiations with Australia’s biggest shopping centre landlord, Scentre Group, led to a lockout of 129 Mosaic stores. Scentre also locked the doors to 38 stores owned by luggage retailer Strandbags.
According to Evans:
“The retail rental market in Australia is not paused because of the pandemic. It is fundamentally changed for the future.”
A history of growth, conflict and negotiation
Though the coronavirus crisis has brought things to a boil, tensions between shopping centre tenants and landlords have simmered for more than 40 years.
Behind Mosaic’s standoff with Scentre are the underlying power dynamics between tenants and landlords. Mutually dependent on one another, they have always fought over the spoils of shopping centre profits. With the COVID-19 crisis, strained relationships are starting to break down.
Australia’s first American-style shopping centre opened in 1957, in the Brisbane suburb of Chermside. It had space for one department store, one supermarket, 24 specialty stores and parking for 650 cars.
As the rise of the private motor car reshaped cities and suburbs, shoppers embraced the convenience and comforts and comforts of the mall.
By the late 1970s they were the dominant shopping experience, outstripping many established “high streets”. They became social as well as commercial hubs.
Read more: Westfield’s history tracks the rise of the Australian shopping centre and shows what’s to come
They were also protected by planning legislation intended to constrain sprawling development, but which also created geographic monopolies by blocking competition nearby.
This all produced highly sought after and valuable retail space.
Naturally owners were keen to increase their profits by expanding these spaces to attract even more shoppers.
Calls for government intervention
But as centres got bigger and more and more specialty retailers signed leases, complaints began to emerge about exploitation and steep rent hikes. By the early 1980s tenants’ complaints had become an issue for both sides of politics.
Intense lobbying led to government inquiries around the country, which found sufficient evidence to recommend industry self-regulation and then retail tenancy legislation.
But the fundamental power dynamics remain. Landlords still have the most convenient and attractive locations for stores. They have control over entire retail environments, and even collect the sales data of their tenants. Their bargaining position in leasing negotiations is invariably very strong.
Sharing profits and costs
In 2008 a Productivity Commission inquiry noted:
“Well-managed shopping centres can unify a large and divergent group of tenants and help centre trade. In return, tenants in centres generally pay higher rents and outgoing expenses than similar tenants in a shopping strip and forego some independence in operating their business.”
It has often been a mutually advantageous relationship, but there has always been a contest between tenants and landlords over how they share both benefits and costs.
The retailers’ argument is rent should be based on the value of the customer traffic the shopping centre delivers to their stores, and those customers have evaporated with COVID-19. As analyst Bill Mooney put it:
With a lease agreement there’s an expectation of a certain amount of customers coming through into the shopping mall and if that nexus is broken, then yes, the landlord can insist on his rights, but which retailer is going to continue to pay rent and go broke?
Mosaic’s projection of store closures emphasises this point.
No one will come out of this a winner. The fight to minimise losses will be bitter. The first casualties will be the most vulnerable: the smallest tenants, with the least bargaining power, in the most precarious financial situations. This echoes the broader pattern of the pandemic’s impact.
For landlords there are longer-term questions. Will the current standoff push retailers towards a permanently smaller physical footprint and greater investment in online shopfronts? Has it created even more uncertainty about retail’s future? How deeply has trust been eroded?
Whatever happens, when there is any sort of return to normal, both sides will enter fresh leasing negotiations with an acrid taste from what is rapidly becoming their most vitriolic fight to date.
This article has been co-published with The Lighthouse, Macquarie University’s multimedia news platform.
This article is republished from The Conversation under a Creative Commons license. Read the original article.
A strategic CIO/CEO partnership allows innovation to thrive in a turbulent global market
Seth Ravin, CEO, Rimini Street
Shifting their focus from being overseers of data centre operations to being strategic partners with their CEOs will enable tech leaders to develop a business-driven innovation roadmap that allows the company to pivot quickly when market conditions change. But CIOs must get creative about finding resources to operationalise the strategy and roadmap, given limited IT budgets. Significant results can be achieved by leveraging a business-driven roadmap in this way – companies are freeing up 40 per cent or more of their IT budget for transformational innovation that builds resilience and enables growth – which is never more important than today.
A CEO/CIO strategic partnership is needed more than ever to enable quick pivots amid instability
Companies are experiencing unprecedented business dynamics in which global disruption and global competition are creating complex, rapidly changing technology investment priorities. It’s business as unusual for most companies, as they find themselves in constant response mode. There is no longer a status quo in the business world – companies must grow, or they will likely die.
For many CIOs, operating the data centre is now the least of their priorities. Their investment roadmaps have been side-railed by disruptive global events, and non-essential projects are being put on hold. To survive and thrive, companies must have a digital core. Almost overnight, CIOs have shifted focus to investing in solutions that serve customers primarily on digital platforms. For many companies, their digital infrastructure must be able to handle 100 per cent remote work. Those that are already digitally platformed will make this adjustment much more nimbly than those that haven’t invested or have underinvested in digital infrastructure.
What CEOs really need from their CIOs is adaptable strategic guidance that will help them pivot very quickly when disruption occurs. CEOs also need their CIOs to make wise IT investment decisions that optimise costs, save jobs, stabilise operations, and shift IT resources to these strategic initiatives. In order to do this, CIOs need to be at the table with the CFO, CEO, and CPO in setting the broader business strategy that drives the IT roadmap.
CIOs must innovate on limited budgets
Today, nearly every company in the world has a financial problem. Either revenue streams have been disrupted on the front end or cash supplies are tighter on the back end. This happened in 2000 with the dot-com meltdown, and again with the mortgage crisis in 2008. However, those scenarios were not the same as the shock that has happened today in such a very short period of time. Every business and every market segment is being impacted by the current global disruption. Governments are spending more money to keep their economies going than they can ever hope to repay. When there is revenue disruption, everything changes. Unfortunately, it takes longer for a company to cut costs than it takes for revenue to fall.
The first order of business, then, is survival. In order to survive, companies must be focused on cash. Many companies are slow-paying or trying to renegotiate with every vendor they have. Scrutiny is being focused on “need to have”, let alone “like to have” or “nice to have” projects and services. Companies are competing for a smaller pool of cash, and prioritisation is top of mind for CIOs who must innovate while keeping current systems operational. Many IT projects are being cancelled. For example, ERP refreshes that don’t bring real value in terms of competitive advantage or growth are being pushed off a year or more until companies rebuild their cash supplies.
The CIO can be the most influential person right now when it comes to IT purchasing decisions. To survive, and ultimately thrive, CIOs need to look at their spending pool and immediately make changes that align revenue on the front end with costs on the back end. In the current market, this means shifting budgets to investments in digital technologies and services that support the company’s innovation strategy, even amid uncertainty. When as much as 90 per cent of the CIO’s budget is spent on ongoing operations and enhancements to back-end systems, this leaves as little as 10 per cent for investments in the company’s innovation strategy.
The goal should be to change back-end systems as little as possible – their level of maturity makes them low-risk for breaking, so the support services needed are primarily tax and regulatory updates, and advice and counsel which can all be obtained from independent, third-party providers at a fraction of the cost paid to the enterprise software vendors.
CIOs instead should optimise the operating costs of back-end systems such as ERP and shift those funds to an IT innovation investment strategy that supports the CEO’s digital priorities. Investments in front-end systems of engagement (where important interactions with customers occur) will more likely address the CEO’s business strategies. These dynamic, customer-facing systems are where constant change is needed in order to remain competitive and where digitalisation will help attract and retain customers – the keys to surviving and thriving.
For more information, please visit riministreet.com
Culture and people will drive tech innovation and growth
Many retailers have adopted automation and AI in recent years to streamline processes, reduce costs and create a better customer experience. However, there are limits to what any company’s automation and AI can accomplish without an equal focus on developing their people and their culture. Now, we’re seeing many companies shift from the automation-focused initiatives of the early 2000s to recognise the role of human intelligence in building smarter, more innovative automations and AI.
Getting the most from AI and automation requires the evaluation skills, expertise and creativity that only humans can deliver. That’s true now, and it will be even clearer and more urgent in the years ahead as digital channels become the arena where retailers compete most fiercely.
AI needs humans to exist and to get smarter, faster
AI relies on humans in two important ways. The first and most obvious is that people – whether data scientists, software developers, analysts or statisticians – are always behind the development of AI. The second reason AI needs humans is to provide feedback and nuance. Without that feedback, AI often delivers experiences that aren’t quite what users want or need.
For example, AI can personalise customer experiences if it’s done in a way that reflects each customer’s journey. However, Gartner has predicted that 80 per cent of marketers will drop personalisation efforts by 2025 “due to lack of ROI, the perils of customer data management or both.” In other words, automation alone is unlikely to meet customers’ needs.
At ClearSale, we often consult with prospective customers who face a similar challenge after fully automating their e-commerce order screening for fraud. Orders that conform to the algorithm’s rules are approved. Those that don’t are rejected.
This sounds like an ideal use-case for full automation. However, the rules that screen out fraud also reject some legitimate orders. When those customers are falsely declined, they often don’t come back. The fully automated system can cost the merchant more in lost revenue and customer lifetime value than it saves by preventing fraud.
ClearSale solves this problem by using human intelligence to evaluate AI-flagged orders to look for legitimate ones. Then, the analysts feed their findings into the algorithm to teach the AI to read these situations better in the future. More good orders are approved, and the retailer keeps more customers.
This combination of human insight with the power of AI allows retailers to create a better experience for their customers while eliminating the financial impact of fraud. This kind of human feedback serves all kinds of AI systems, such as:
Streaming audio playlists. Apps such as Spotify have human playlist editors who curate music and create specialised lists. Yes, playlists can be created by AI that analyses your listening habits. But humans also link certain songs with moods and activities in ways that AI can’t yet.
Social media content screening. Facebook has invested years in developing AI tools to flag offensive content, but the company still needs input from human content moderators in order to keep up with the rapid evolution of memes and new topics such as pandemic-related hate speech.
The evolution of AI object recognition. Google’s Recaptcha AI is a tool that sites can use to make sure bots aren’t filling out their forms. It’s also an object recognition algorithm with uses that include digitising millions of books and newspapers, refining Google Image Search results and helping driverless cars avoid collisions. How? Every time a human user identifies all the traffic lights or street signs in a Recaptcha, the AI gets a little bit smarter.
Clearly, human intelligence is a key ingredient in artificial intelligence. To cultivate the human intelligence that drives innovation, technology companies must put people at the centre of their culture.
Technology companies need to cultivate a people-first culture to innovate better
Retail, like other industries, can fall into a trap that business consultant Clayton Christensen has called the “innovator’s dilemma”. This dilemma arises when actions and experiments that lead to innovation are discouraged or neglected in favour of technology that works right now, or that worked in the past. When this happens, companies get stale, then fall behind when newer competitors deliver fresh approaches.
Here again, the solution is a combination of the human element and technology. The people who build AI systems – the data scientists and developers mentioned earlier – need the freedom to keep innovating rather than becoming locked into one way of doing things. ClearSale CEO Bernardo Lustosa advocates creating a company culture of learning and experimentation based on two major pillars.
One is a structure that frees employees to experiment with new technology and processes, even if they fail, while maintaining the resources to deliver the experience customers expect now. The other is leadership that’s prepared to pivot to meet changing customer needs and market demands during times of disruption.
In 2020 especially, we’re witnessing a shift in retail that demands innovation and responsiveness. Companies that were already fostering creativity and adaptability are coping better with this challenge.
Balance technology and culture during rapid growth
When your company is growing fast or adapting to disruptive change, you may end up with new roles to fill. The challenge is to find people to support your technology while maintaining your culture.
ClearSale has grown from a couple of dozen employees to more than 1,500 in a decade, while nurturing its culture and improving its technology. One way we’ve accomplished this is by hiring for cultural fit and problem-solving skills rather than strictly for technical knowledge.
By training people in-house and encouraging creative thinking, we’ve been able to deliver services that go beyond solving basic fraud problems to solving the larger, costlier problems of false refusals and lost customers.
This approach can work for other companies that rely on technology and automation but need to stay innovative. For example, McKinsey found that more than half of the most digitised companies build their AI capacity in-house and 42 per cent train or upskill in-house talent for their AI initiatives.
McKinsey & Company. AI adoption advances, but foundational barriers remain. November 2018
At ClearSale, we see AI-driven automation and human insights as complementary rather than competing, within our own company and at our innovative e-commerce clients. Working together, people and AI can maximise the value of automation, prevent unforeseen negative outcomes such as false declines, drive creative solutions to new problems and pivot quickly to meet rapid changes in the market. Retailers who embrace the human/AI partnership are poised to make the most of the current landscape and whatever comes next.
For more information on why it’s important to have human expertise and AI-driven automation combined to fight fraud, please click here.
Adapt, survive and thrive – the mantra of digital supply chains
What lessons can be learned from an industry that’s turning itself around through modern practices and smart supply chains?
Technology
We find ourselves in a state of complete flux: legacy IT systems, which seemed so capable a few years ago, are rapidly becoming obsolete, and new industry players are disrupting old models of working, changing the rules and transforming the landscape of competition. As a result, customer expectations are constantly shifting as they demand digital and hyperconnected experiences. Because of this, the IT function is under unrelenting pressure to deploy leading-edge capabilities such as data analytics, advanced cyber-security and automated processing in an effort to keep up.
Leading decision makers in sourcing, supply chain and logistics need to be prepared for what’s to come as technological advancements and ever-changing consumer habits force companies to adapt, survive, and thrive. The integration of one real-time system will benefit organisations with increased productivity, scalability, speed and cost-competitiveness. The digitisation of corporate business processes will make your business more accurate and shorten lead times during the production and distribution cycles.
Sustainability
The fashion industry remains one of the worst environmental offenders, without doubt – although many manufacturers can be accused of making the same mistakes. However, emerging technologies are helping to realise a whole new set of capabilities and business models that can help this sector embed sustainability into the very core of the value chain, from product ideation through to after-care. While many companies recognise the importance of sustainability for their business, they often don’t know where to start. Ultimately, if you are to become truly sustainable, your practices must go beyond PR spiel, and sustainability must be positioned at the very centre of all you do, in a manner that remains commercially viable. With a fragmented and non-digital supply chain this will be much harder to change, so traceability, enabled by tech such as blockchain, is going to make a gigantic impact.
Academia
For too long academia has focused on theory over practice, but that is changing. Consumer-focused industries are moving at a blinding pace, from supply chain digitisation through to retail trends. They are looking specifically at how to attract and maintain a strong consumer relationship resulting in a profitable business model. The realisation that the academic community must shift to better prepare students for positions in this new and very real world is evident, and so the focus of some institutions is shifting towards skill-based education. The retraining of “other-skilled” individuals is equally important as new training is to the “less experienced” youth. In today’s world, age is but a number – you will be judged on your merits.
Near-shoring
This is a practice that is perhaps more applicable, though not unique, to the fashion industry. US and European mass-market brands were rushing to move as much production to Asia as possible in order to gain a cost advantage. Some of them have successfully done this, ensuring high quality, speed, and compliance, and have been able to deliver quality products to consumers at the best price. This mindset is changing, mainly because of the unit-cost adjustment that has gone in line with regional socio-economic developments. Increasing nearshoring (production sites closer to the end-consumer) and more automated production models will make you more sustainable, certainly, but will that result in less profit?
Summary
Over the last 20 years there has been an ever-increasing demand for greater speed and variety, but at a lower cost and with a more environmental outlook. Deploying digital technologies and advanced processes within product creation is a start, but once the product leaves the factory how are you going to achieve the kind of connectivity, transparency and consumer satisfaction that will set you apart from your competition?
Unless you realise the end-to-end potential, you will never achieve the kind of ROI you, or your organisation, need to succeed.
If you are in the fashion, apparel or footwear industry then you might want to have your say in these important discussions at one of our events – click here for more details or for more information, you can contact us here.
by David Wilcox, Head of Communications, PI Apparel
Adapt, survive and thrive – the mantra of digital supply chains
What lessons can be learned from an industry that’s turning itself around through modern practices and smart supply chains?
Technology
We find ourselves in a state of complete flux: legacy IT systems, which seemed so capable a few years ago, are rapidly becoming obsolete, and new industry players are disrupting old models of working, changing the rules and transforming the landscape of competition. As a result, customer expectations are constantly shifting as they demand digital and hyperconnected experiences. Because of this, the IT function is under unrelenting pressure to deploy leading-edge capabilities such as data analytics, advanced cyber-security and automated processing in an effort to keep up.
Leading decision makers in sourcing, supply chain and logistics need to be prepared for what’s to come as technological advancements and ever-changing consumer habits force companies to adapt, survive, and thrive. The integration of one real-time system will benefit organisations with increased productivity, scalability, speed and cost-competitiveness. The digitisation of corporate business processes will make your business more accurate and shorten lead times during the production and distribution cycles.
Sustainability
The fashion industry remains one of the worst environmental offenders, without doubt – although many manufacturers can be accused of making the same mistakes. However, emerging technologies are helping to realise a whole new set of capabilities and business models that can help this sector embed sustainability into the very core of the value chain, from product ideation through to after-care. While many companies recognise the importance of sustainability for their business, they often don’t know where to start. Ultimately, if you are to become truly sustainable, your practices must go beyond PR spiel, and sustainability must be positioned at the very centre of all you do, in a manner that remains commercially viable. With a fragmented and non-digital supply chain this will be much harder to change, so traceability, enabled by tech such as blockchain, is going to make a gigantic impact.
Academia
For too long academia has focused on theory over practice, but that is changing. Consumer-focused industries are moving at a blinding pace, from supply chain digitisation through to retail trends. They are looking specifically at how to attract and maintain a strong consumer relationship resulting in a profitable business model. The realisation that the academic community must shift to better prepare students for positions in this new and very real world is evident, and so the focus of some institutions is shifting towards skill-based education. The retraining of “other-skilled” individuals is equally important as new training is to the “less experienced” youth. In today’s world, age is but a number – you will be judged on your merits.
Near-shoring
This is a practice that is perhaps more applicable, though not unique, to the fashion industry. US and European mass-market brands were rushing to move as much production to Asia as possible in order to gain a cost advantage. Some of them have successfully done this, ensuring high quality, speed, and compliance, and have been able to deliver quality products to consumers at the best price. This mindset is changing, mainly because of the unit-cost adjustment that has gone in line with regional socio-economic developments. Increasing nearshoring (production sites closer to the end-consumer) and more automated production models will make you more sustainable, certainly, but will that result in less profit?
Summary
Over the last 20 years there has been an ever-increasing demand for greater speed and variety, but at a lower cost and with a more environmental outlook. Deploying digital technologies and advanced processes within product creation is a start, but once the product leaves the factory how are you going to achieve the kind of connectivity, transparency and consumer satisfaction that will set you apart from your competition?
Unless you realise the end-to-end potential, you will never achieve the kind of ROI you, or your organisation, need to succeed.
If you are in the fashion, apparel or footwear industry then you might want to have your say in these important discussions at one of our events – click here for more details or for more information, you can contact us here.
by David Wilcox, Head of Communications, PI Apparel
How to know if your online shopping habit is a problem — and what to do if it is
Melissa Norberg, Macquarie University and Jonathan David, Macquarie University
As COVID-19 quarantines and lockdowns drive up psychological distress, many people have increased their screen time, including online shopping, to cope.
Like alcohol use — or overeating, watching TV or surfing the internet — online shopping doesn’t pose a problem when used as an occasional treat.
For some people, however, these behaviours can turn into habits that are hard to break.
Here’s how to know when online shopping becomes a problem and what to do if it does.
Read more: When possessions are poor substitutes for people: hoarding disorder and loneliness
How to know if it’s a problem
A behaviour becomes an addiction when at least three criteria are met:
- the behaviour is clearly excessive given its context
- it causes significant distress or impairment for the person or important people in their lives
- it persists despite not resulting in reward.
Shopping online for your weekly groceries would not usually be considered a behavioural addiction. Neither would making COVID-19 related online purchases of exercise equipment, office supplies, or masks.
However, online shopping might be considered addiction-like if you find yourself doing the following:
- spending a great deal of time shopping
- buying a lot more than you need
- finding it hard to stop shopping even though you rarely seem to enjoy the stuff you buy.
Relationship issues and financial hardship are other key clues your online shopping has become a problem.
Some people may experience online shopping problems without even spending a lot of money; just spending excessive amounts of time browsing products may be enough to warrant reflection and possibly intervention.
Read more: Psychology can explain why coronavirus drives us to panic buy. It also provides tips on how to stop
What does the research say about online shopping and addiction?
For many people, shopping can be a social or leisurely activity. It can feel good, and desires to feel good (and not bad) can get wrapped up with the desire to buy and own material possessions.
In fact, research from my (Melissa Norberg) lab suggests compulsive shopping can be associated with a feeling of being unable to deal with distress.
Problematic shopping also may occur when people attempt to compensate for an unmet psychological need, such as a need to feel competent, in control, or connected to others.
People sometimes turn to comfort products when they feel unsupported by significant others. They may buy compulsively when they feel ambivalent or confused about their sense of self.
So it’s not surprising that during the pandemic, many people report turning to online shopping to cope with significant changes to their social, work and family lives.
Australia experienced a surge in online shopping in March and April and online spending now remains well above what it was a year ago.
What to do if you want to cut back
If online shopping or browsing is interfering with your life, there are several strategies you can try.
The first is to determine what triggers your online shopping. Are you trying to feel better about yourself or relieve negative emotions such as boredom, stress or anxiety? Are you experiencing poor sleep or unhealthy eating? (If so, upsetting events might be more difficult to manage).
Is the online shopping occurring mostly at a certain time of day or in certain circumstances (after a glass or two of wine, after scrolling social media or when you’re lying in bed at the end of a long day, for example?)
Next, try to figure out if there are other, more effective ways you can respond to whatever is triggering your excessive shopping.
If you tend to react impulsively to situations, practise identifying your urge to respond and then sitting with that discomfort so that you can choose a less impulsive and more productive or fulfilling response. Being able to tolerate negative emotions and respond flexibly to stressful situations is associated with healthier outcomes.
Chatting on the phone (or by text) with a friend, doing a peaceful activity (taking a bath, reading a book), exercising, or practising a hobby can help you to feel supported, relaxed, and talented. These activities also can lessen anxiety and depression.
Once you determine what you can do instead of shopping, develop a daily schedule. Having a schedule will help you feel more in control of your life and reduce the time available to shop online.
Try to set goals and monitor your shopping behaviour.
You can also try to:
- make shopping lists (and stick to them) when buying groceries and other essential items
- set a timer to limit how long you browse
- set constraints on how much you spend
- if possible, use debit cards instead of credit cards so you can only spend money you have
- steer clear of “buy now, pay later” services such as Afterpay
- if you have multiple credit cards, consider closing them to limit your ability to spend money you don’t have.
And don’t forget to reward yourself (with something other than shopping) when you meet your goals.
Research has found these strategies can help people reduce their compulsive shopping.
If you have trouble reducing your shopping behaviour on your own, seek help from a professional. If you visit your GP, they can refer you to a specialist and provide you with a mental health care plan, which entitles you to Medicare rebates for up to 10 individual and 10 group appointments with some mental health services in a year.
If this article has raised issues for you, or if you’re concerned about someone you know, call Lifeline on 13 11 14.
Melissa Norberg, Associate Professor in Psychology, Macquarie University and Jonathan David, PhD Candidate, Macquarie University
This article is republished from The Conversation under a Creative Commons license. Read the original article.
How to know if your online shopping habit is a problem — and what to do if it is
Melissa Norberg, Macquarie University and Jonathan David, Macquarie University
As COVID-19 quarantines and lockdowns drive up psychological distress, many people have increased their screen time, including online shopping, to cope.
Like alcohol use — or overeating, watching TV or surfing the internet — online shopping doesn’t pose a problem when used as an occasional treat.
For some people, however, these behaviours can turn into habits that are hard to break.
Here’s how to know when online shopping becomes a problem and what to do if it does.
Read more: When possessions are poor substitutes for people: hoarding disorder and loneliness
How to know if it’s a problem
A behaviour becomes an addiction when at least three criteria are met:
- the behaviour is clearly excessive given its context
- it causes significant distress or impairment for the person or important people in their lives
- it persists despite not resulting in reward.
Shopping online for your weekly groceries would not usually be considered a behavioural addiction. Neither would making COVID-19 related online purchases of exercise equipment, office supplies, or masks.
However, online shopping might be considered addiction-like if you find yourself doing the following:
- spending a great deal of time shopping
- buying a lot more than you need
- finding it hard to stop shopping even though you rarely seem to enjoy the stuff you buy.
Relationship issues and financial hardship are other key clues your online shopping has become a problem.
Some people may experience online shopping problems without even spending a lot of money; just spending excessive amounts of time browsing products may be enough to warrant reflection and possibly intervention.
Read more: Psychology can explain why coronavirus drives us to panic buy. It also provides tips on how to stop
What does the research say about online shopping and addiction?
For many people, shopping can be a social or leisurely activity. It can feel good, and desires to feel good (and not bad) can get wrapped up with the desire to buy and own material possessions.
In fact, research from my (Melissa Norberg) lab suggests compulsive shopping can be associated with a feeling of being unable to deal with distress.
Problematic shopping also may occur when people attempt to compensate for an unmet psychological need, such as a need to feel competent, in control, or connected to others.
People sometimes turn to comfort products when they feel unsupported by significant others. They may buy compulsively when they feel ambivalent or confused about their sense of self.
So it’s not surprising that during the pandemic, many people report turning to online shopping to cope with significant changes to their social, work and family lives.
Australia experienced a surge in online shopping in March and April and online spending now remains well above what it was a year ago.
What to do if you want to cut back
If online shopping or browsing is interfering with your life, there are several strategies you can try.
The first is to determine what triggers your online shopping. Are you trying to feel better about yourself or relieve negative emotions such as boredom, stress or anxiety? Are you experiencing poor sleep or unhealthy eating? (If so, upsetting events might be more difficult to manage).
Is the online shopping occurring mostly at a certain time of day or in certain circumstances (after a glass or two of wine, after scrolling social media or when you’re lying in bed at the end of a long day, for example?)
Next, try to figure out if there are other, more effective ways you can respond to whatever is triggering your excessive shopping.
If you tend to react impulsively to situations, practise identifying your urge to respond and then sitting with that discomfort so that you can choose a less impulsive and more productive or fulfilling response. Being able to tolerate negative emotions and respond flexibly to stressful situations is associated with healthier outcomes.
Chatting on the phone (or by text) with a friend, doing a peaceful activity (taking a bath, reading a book), exercising, or practising a hobby can help you to feel supported, relaxed, and talented. These activities also can lessen anxiety and depression.
Once you determine what you can do instead of shopping, develop a daily schedule. Having a schedule will help you feel more in control of your life and reduce the time available to shop online.
Try to set goals and monitor your shopping behaviour.
You can also try to:
- make shopping lists (and stick to them) when buying groceries and other essential items
- set a timer to limit how long you browse
- set constraints on how much you spend
- if possible, use debit cards instead of credit cards so you can only spend money you have
- steer clear of “buy now, pay later” services such as Afterpay
- if you have multiple credit cards, consider closing them to limit your ability to spend money you don’t have.
And don’t forget to reward yourself (with something other than shopping) when you meet your goals.
Research has found these strategies can help people reduce their compulsive shopping.
If you have trouble reducing your shopping behaviour on your own, seek help from a professional. If you visit your GP, they can refer you to a specialist and provide you with a mental health care plan, which entitles you to Medicare rebates for up to 10 individual and 10 group appointments with some mental health services in a year.
If this article has raised issues for you, or if you’re concerned about someone you know, call Lifeline on 13 11 14.
Melissa Norberg, Associate Professor in Psychology, Macquarie University and Jonathan David, PhD Candidate, Macquarie University
This article is republished from The Conversation under a Creative Commons license. Read the original article.
New ways to buy old clothes
The rise of the clothes resale market has been raising some eyebrows, with ThreadUP, the leading American thrift store, predicting in a recent report that the second-hand market will grow to almost twice the size of fast fashion by 2029. ThreadUP identified the resale and vintage clothing market as the main driver of this exponential growth, however, with charity clothes sales projected to increase only incrementally.
But it seems that the vintage or for-profit pre-owned clothes market isn’t actually expanding at the expense of charity shops. In fact, the difference between these two strands of used clothes retail is perhaps less distinct than it once was.
Charity shops have come a long way from their previous incarnations as musty knick-knack emporiums, and are now far more closely aligned with the profile of vintage outlets. They’re also far more selective about their stock – only 10 to 30 per cent of donated items ending up on the racks of British charity shops these days, with more valuable items being listed on online marketplaces. And when clothes do make it into stores, they present their stock in a visually pleasing, orderly fashion instead of chucking them into crates.
The shift is happening in the other direction too – vintage shops often associate themselves with good causes through, for example, the Give as You Live (GAYL) scheme, where customers can raise money for their favourite charity at no extra cost by purchasing online from one of GAYL’s 300-plus retail partners.
Although most people have scruples about using the lower prices of charity shops in poorer areas to make profits, many “treasure hunters” make a living from finding underpriced items in charity shops, boot fairs or jumble sales then flipping them somewhere else and pocketing the difference.
So should charity shops worry about the competition posed by the rise of vintage shops – where their own stock might even end up, and priced for more than they realised it was worth? In the long run, probably not. There’s a growing demand for quality vintage, and the fact that celebrities post their latest old-school acquisitions on Instagram is making the purchase of pre-loved clothes both fashionable and virtuous, thus creating more footfall for charities too.
Indeed, upcycling or repurposing is a big part of the attraction of vintage clothing. Shops today dye, airbrush or patch up old jeans in ever more inventive ways. They turn old XL-sized men’s shirts into pinnies or oversize crop tops. Although some of these processes may negatively impact the items’ green credentials, saving water consumption by extending the life cycle of old clothes undoubtedly earns some ecological brownie points.
And not only do leading vintage clothes shops source their stock with the latest fashion trends in mind, they are also proactively looking to translate these trends into second-hand fashion. Many vintage stores have their own labels – Beyond Retro, which has developed into one of the most recognised vintage stores in the UK, even operates a factory of its own in India, like its primary partners do.
Will big fashion labels jump on the recycling bandwagon?
For some big fashion labels with sustainability already at the heart of their operation, the time has come to reap the benefits of an environmentally conscious marketing strategy. Urban Outfitters has been curating vintage pieces since the 1970s. But in response to the soaring sustainability concerns of consumers, it has recently launched its Urban Renewal platform. Meanwhile Patagonia, a designer of outdoor clothing and gear, an advocate of ‘build to endure’, set up the Sustainable Apparel Coalition (SAC) back in 2010 in an unlikely partnership with Walmart. SAC now has more than 250 members and provides brands with tools to assess and improve their sustainability.
Feeling the pressure from consumers, fast fashion brands are also branching out into second-hand clothes in an attempt to avoid being blacklisted by the environmentally aware. H&M has bought a majority stake in Swedish online second-hand shop Selpy, which has already opened its first international shop in Germany. Meanwhile, in a U-turn after incinerating millions of pounds’ worth of deadstock, luxury brand Burberry launched an online consignment shop for the brand in the US a year ago.
Today, shops as diverse as H&M, Urban Outfitters and other more or less sustainable co-exist on – for example – London’s Oxford Street, with the vintage stores of leading independent second-hand clothes retailers in surrounding side streets. A shortage of secondary materials or used clothes is unlikely to raise a barrier to big chains entering the second-hand clothes market – especially now that the pandemic has presented developing countries with an opportunity to protect their home markets by banning used clothes imports from the West.
What remains to be seen is whether these big chains can redraw the market by upscaling the design and selling of apparel made of recycled materials and repurposed pieces – thus risking the disruption of their original business model – or will instead form partnerships with established players of the secondary clothes market and keep their core business essentially intact. Either way, they ignore the used clothing market at their peril.
New ways to buy old clothes
The rise of the clothes resale market has been raising some eyebrows, with ThreadUP, the leading American thrift store, predicting in a recent report that the second-hand market will grow to almost twice the size of fast fashion by 2029. ThreadUP identified the resale and vintage clothing market as the main driver of this exponential growth, however, with charity clothes sales projected to increase only incrementally.
But it seems that the vintage or for-profit pre-owned clothes market isn’t actually expanding at the expense of charity shops. In fact, the difference between these two strands of used clothes retail is perhaps less distinct than it once was.
Charity shops have come a long way from their previous incarnations as musty knick-knack emporiums, and are now far more closely aligned with the profile of vintage outlets. They’re also far more selective about their stock – only 10 to 30 per cent of donated items ending up on the racks of British charity shops these days, with more valuable items being listed on online marketplaces. And when clothes do make it into stores, they present their stock in a visually pleasing, orderly fashion instead of chucking them into crates.
The shift is happening in the other direction too – vintage shops often associate themselves with good causes through, for example, the Give as You Live (GAYL) scheme, where customers can raise money for their favourite charity at no extra cost by purchasing online from one of GAYL’s 300-plus retail partners.
Although most people have scruples about using the lower prices of charity shops in poorer areas to make profits, many “treasure hunters” make a living from finding underpriced items in charity shops, boot fairs or jumble sales then flipping them somewhere else and pocketing the difference.
So should charity shops worry about the competition posed by the rise of vintage shops – where their own stock might even end up, and priced for more than they realised it was worth? In the long run, probably not. There’s a growing demand for quality vintage, and the fact that celebrities post their latest old-school acquisitions on Instagram is making the purchase of pre-loved clothes both fashionable and virtuous, thus creating more footfall for charities too.
Indeed, upcycling or repurposing is a big part of the attraction of vintage clothing. Shops today dye, airbrush or patch up old jeans in ever more inventive ways. They turn old XL-sized men’s shirts into pinnies or oversize crop tops. Although some of these processes may negatively impact the items’ green credentials, saving water consumption by extending the life cycle of old clothes undoubtedly earns some ecological brownie points.
And not only do leading vintage clothes shops source their stock with the latest fashion trends in mind, they are also proactively looking to translate these trends into second-hand fashion. Many vintage stores have their own labels – Beyond Retro, which has developed into one of the most recognised vintage stores in the UK, even operates a factory of its own in India, like its primary partners do.
Will big fashion labels jump on the recycling bandwagon?
For some big fashion labels with sustainability already at the heart of their operation, the time has come to reap the benefits of an environmentally conscious marketing strategy. Urban Outfitters has been curating vintage pieces since the 1970s. But in response to the soaring sustainability concerns of consumers, it has recently launched its Urban Renewal platform. Meanwhile Patagonia, a designer of outdoor clothing and gear, an advocate of ‘build to endure’, set up the Sustainable Apparel Coalition (SAC) back in 2010 in an unlikely partnership with Walmart. SAC now has more than 250 members and provides brands with tools to assess and improve their sustainability.
Feeling the pressure from consumers, fast fashion brands are also branching out into second-hand clothes in an attempt to avoid being blacklisted by the environmentally aware. H&M has bought a majority stake in Swedish online second-hand shop Selpy, which has already opened its first international shop in Germany. Meanwhile, in a U-turn after incinerating millions of pounds’ worth of deadstock, luxury brand Burberry launched an online consignment shop for the brand in the US a year ago.
Today, shops as diverse as H&M, Urban Outfitters and other more or less sustainable co-exist on – for example – London’s Oxford Street, with the vintage stores of leading independent second-hand clothes retailers in surrounding side streets. A shortage of secondary materials or used clothes is unlikely to raise a barrier to big chains entering the second-hand clothes market – especially now that the pandemic has presented developing countries with an opportunity to protect their home markets by banning used clothes imports from the West.
What remains to be seen is whether these big chains can redraw the market by upscaling the design and selling of apparel made of recycled materials and repurposed pieces – thus risking the disruption of their original business model – or will instead form partnerships with established players of the secondary clothes market and keep their core business essentially intact. Either way, they ignore the used clothing market at their peril.
Ethical business makes even more sense in a crisis
The COVID wave continues to affect business and the lives of ordinary people, but it has also become an opportunity for companies and citizens to think about what’s important in private and commercial life. As the priorities for business and therefore procurement and supply management, are increasingly being set by the big issues in our society, we are likely to see more significant changes in how we live, work and do business, and the imperative to focus on ethics and sustainability.
Consumers are tightening their purse strings and supply chains are striving to adapt to new demands, so you could be forgiven for thinking that being ethical is the last thing on everyone’s minds. In fact research conducted by CIPS earlier in the year found that as the COVID health crisis hit the UK, 15% of businesses turned away from their sustainability goals as other seemingly more important factors came into view. Supermarkets also reneged on their commitment to reduce plastic bag usage as fears over the pathogen’s pathway had them turning to old habits for convenience and safety.
In recent years as well as during the pandemic, consumers are better informed and more demanding. As an Accenture survey from May discovered, shoppers are becoming ever more conscious about their purchases in an attempt to reduce waste, shop more ethically, more locally and choose sustainable goods. A 2018 survey by the same consultancy found that consumers preferred to buy from companies whose purchasing strategies were driven by the company’s ethical principles. So it’s safe to say that not only are ethics and sustainability back on the agenda they have never truly been forgotten and will only increase in importance.
Ethical procurement is not just about sustainability and the responsible use of scarce resources. It is the treatment of suppliers during the life of the contract and developing strong, open relationships, even offering support during difficult times. That includes paying responsibly. The limited success of the UK Government’s Prompt Payment Code, to encourage fairer payment practices from business, highlights the need for tougher measures, such as fines for larger corporates and more scrutiny of the practices of those signed up to the Code. The decision by UK Government to deny those businesses without a record of responsible payment opportunities to supply the public sector, is certainly a move in the right direction.
Some companies have been more forward-thinking, and more responsible, than others. The supermarket Morrisons paid its SME suppliers early during the pandemic and even redefined its small suppliers, albeit temporarily, as those with a turnover up to £1million rather than £100,000 a year. This improved cash-flow helped SMEs survive and kept the supermarket’s shelves stocked.
Unchecked fraud and corruption in supply chains leeches away billons each year around the world, and takes away much-needed support from the farmers and small businesses that rely on fair treatment for their existence and for the health of local economies. Procurement and supply chain managers are at the forefront of interrogating every tier in their supply chain, so should have full transparency and a macro view of what is going on.
Ethical behaviour should be paramount in every procurement and business decision, so should we now be moving beyond meeting basic expectations towards making a stronger positive impact? Social value in procurement can change people’s lives and many public sector bodies have already embedded this requirement into their procurement frameworks. An example of social value could be choosing a local supplier from an ethnic minority group or supporting local community initiatives. We need the deeper understanding of how taking one decision in one part of the supply chain, has an impact in another area and how the social effects should be factored into procurement decisions.
We must eradicate the scourge of modern slavery from global supply chains. Accountability and responsibility for an exposed supply chain sits with the procurement team. Trained and qualified professionals are best placed to take the initiative; protecting not only individual lives but the reputation of organisations. With full transparency of their supply chains they can expose this terrible practice. Only a few months ago in Leicester, the fashion retailer Boohoo was accused of exploitation. Allegedly workers were paid below the UK minimum wage, working in unsafe conditions and were forced to come to work when sick. Modern slavery is widespread, it affects almost all sectors and general awareness is not where it must be with some big retailers still caught out.
Effective and efficient supply chains are the core of all successful companies’ operations, if they fail as a result of unethical practice, a company fails. With a more positive business environment emerging, this issue sits in the procurement space and that’s why CEOs are right to place their trust in well-qualified procurement and supply chain managers to do the right thing.
by Malcolm Harrison, Group CEO, CIPS
Changing procurement for a brave new world
There have been plenty of challenges in the past few years, but the Covid-19 crisis is different. It has reached every consumer without discrimination, sending a shockwave up the supply chain to affect every company worldwide. Now is the time for them to act to protect themselves for the future.
“With access to the right data, companies can react quickly to manage their risk and their costs,” says Alun Rafique, CEO, Market Dojo. “Procurement are the new heroes, saving their organisations cash when sales are dropping.”
There are three important areas where procurement software provider Market Dojo has seen businesses focus during Covid-19:
• Optimising cash flow
• Collaborating both internally and externally
• Improving supply chain resilience
Market Dojo believes there is a better way to help procurement teams mitigate risk, manage information and minimise costs outside of using emails and spreadsheets: allowing them to master supply chain decisions.
Market Dojo’s software can empower procurement professionals in their operational and strategic activities, from supplier onboarding to running tenders and managing their contracts. Some of Market Dojo’s best-known customers include Paddy Power, Aggreko and Logitech.
By assisting with storing important information online, such as contract renewals, and enabling users to negotiate online, the software helps clients to not only save money but also reduce their costs.
Market Dojo recognises that virtual teams are the new norm – and that they need modern online tools to overcome new challenges, and help simplify internal collaboration with stakeholders and external innovation with suppliers.
For many companies, the focus during Covid-19 has been supply chain resilience. With accurate data and tools such as Market Dojo, risks can be quickly identified and evaluated. Potential supply chain options and opportunities can be uncovered, along with alternative strategies such as nearshoring, that can be developed and rapidly implemented with tracking and auditability.
“One place where a lot of our clients start is with a reverse auction,” says Nicholas Martin, CTO of Market Dojo. “It is not unusual for a client to spend £500 and save 10 to 20 per cent on their goods or services.”
Market Dojo is optimistic for the future and excited about how procurement is evolving to meet the demands of this brave new world. As former Intel CEO Andy Grove pointed out, “Bad companies are destroyed by crises; good companies survive them; great companies are improved by them.”
Can Market Dojo help with your procurement processes? Book a demo today.