Logistics

Apparel and footwear brands could lose up to $17 billion this year due to supply-chain disruptions: report

Meanwhile, Nike outlined its “digital-first” supply chain.
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Image by Alexander Rotker on Unsplash

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As if the supply chain weren’t already hurting, the crisis is still costing companies: A new report from Kearney shows North American apparel and footwear retailers could lose between $9 billion and $17 billion in EBITDA this year.

Slowed production, delayed shipping, missing inventory—strains are weakening every link in the supply chain. Kearney notes that only 12% of 400 organizations it studied (with the World Economic Forum) are considered “resilience leaders” who can handle this kind of disruption.

  • Meaning? They can put money into solutions like adaptive distribution methods.

Some hope: The authors of the report predict growing demand for new additions to consumers’ closets over the next six to 18 months as they return to the office. But, of course, that could put even more pressure on the supply chain.

Kearney says SKU and “complexity” reduction can help strengthen footwear and apparel operations. (Streetwear is about to get basic.) Also helpful: redundant supply sourcing and AI-driven inventory management.

Searching for solutions: Nike, for example, outlined its “digital-first” supply chain yesterday, as well as other priorities to continue during the pandemic.

The sportswear giant has opened regional distribution centers in the US and Europe and employed 1,000 new “collaborative robots.”

  • By utilizing these distribution center robots, Nike said it tripled its digital order capacity in North America, Europe, the Middle East, and Africa for the past two holiday seasons.

In August, Nike also rolled out an LA-to-Memphis train, dubbed the “sole train,” linking the country’s largest container ports with Nike’s Tennessee facilities to help more efficiently fulfill orders. It fast-tracked goods to Nike’s distribution centers and partnered with local drayage carriers that off-loaded the train as soon as it arrived. Product was available within 24 hours—no need for sole-searching.—JG

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