By Devin Partida
This year has not been kind to many Canadian retailers. Despite a considerable sales jump in June, retail figures have remained low throughout much of 2020. As the pandemic continues and customers stay in their homes, many operations have to modify their business to stay afloat.
Canadian retail has seen unprecedented levels of adaptation as companies shift to these new challenges. While many of these changes have focused on customer-facing practices, like embracing e-commerce, retailers are also adjusting their behind-the-counter procedures. One such trend that’s growing among retailers is direct store delivery (DSD).
What Is Direct Store Delivery?
In most retail supply chains, individual stores don’t get products from the original supplier. Instead, goods go from the supplier to a distribution center before being sent to their final destination. Direct store delivery cuts out the intermediary in this process.
In DSD models, suppliers ship directly to stores, bypassing the need for a central distribution center. It’s not a new process by any means but has seen increased adoption in the Canadian retail sector as of late. Whether this trend will continue after the pandemic is unclear, but for now, it shows promise.
DSD was more popular among sellers of time-sensitive or fast-moving products in the past. Now, though, a wider variety of retailers are adopting this process to deal with COVID-19-related challenges. Here’s a closer look at why.
Adapting to Changing Consumer Trends
Retailers haven’t had to deal solely with a shift in sales figures. The way consumers buy things is changing, not just the number of things they buy. Although customers are making fewer shopping trips, these trips are typically larger, as people stock up on goods.
With people making more purchases at once, running out of stock is a more pressing concern. The simplicity of a DSD model means stock availability is more transparent, making it easier to avoid shortages. By adopting this approach, retailers can meet this new trend of consumers buying in bulk.
The pandemic has also highlighted the need for flexibility as trends keep shifting. Since DSD models enable faster cycle times, they improve a store’s flexibility. Retailers can then continue business without worrying that another shift in consumer habits will disrupt their operations.
Mitigating the Economic Impact of COVID-19
It’s hard to talk about how COVID has changed retail without mentioning its economic repercussions. While sales have started to recover since the climax of the pandemic, this recovery has remained sluggish. On top of that, many retailers are now spending more to sustain deeper, more frequent cleaning and other anti-COVID measures.
Transitioning to a DSD model can help lessen the impact of these economic challenges. Retailers that use DSD can lower transportation costs by 15%, helping make up for increased expenses elsewhere. This approach’s shorter cycle times enable a just-in-time restocking model, reducing wasted inventory and further driving down costs.
Retailers can better gauge demand with DSD, thanks to greater inventory visibility. As a result, stores can ensure they focus on high-volume products instead of those that won’t sell anymore. Since the pandemic has impacted various products and sectors differently, this flexibility is crucial.
Adopting New Practices Can Help Retailers Survive 2020
Few retailers will finish 2020 on a high note, but it doesn’t have to be their end. Those that have adjusted their operations quickly have seen the greatest amount of success. As the pandemic goes on, adaptability will continue to support struggling stores.
Direct store delivery is just one example in a series of challenges coming to Canadian retail. These shifts may cause temporary disruptions, but they’re helping stores survive in the long run. Without adapting, retailers might not make it through the year.
Devin Partida is a writer and blogger, as well as the Editor-in-Chief of ReHack.com