Two words frighten even the most robust retailer supply chain. Panic buying. 

The sudden craze for a product, where customers quickly reduce available stock to zero, is a vulnerability exposed by the pandemic. According to the Australian Bureau of Statistics, panic buying peaked in March 2020, with demand soaring for non-perishable goods including toilet paper, canned food and pasta. For retailers, it was a shock that highlighted the ill-preparedness of supply chains to quickly mobilise enough product to meet the extreme demand in time. 

However, major spikes in demand are now becoming commonplace thanks to influencers and celebrities. 

Look no further than Kylie Jenner as an example of this viral shopping – leveraging her massive following, the initial launch of her lipstick sold out worldwide in 10 minutes.

Influencer and viral shopping have become a conduit to artificially inflate demand for a product. As an industry, it continues to grow, with Influencer Marketing Hub projecting that the sector will be worth 13.8 billion in 2021. The massive success of a campaign with an influencer or celebrity like Kylie Jenner is a scenario that fashion, and retailer supply chains are often unprepared for. 

With panic-buying and viral shopping, the supply chain faces an uphill battle to match supply with unprecedented levels of demand. Supply chains often have to provide an out-of-stock notice because there isn’t enough available stock to service the spike in demand.

By the time supply chains have transitioned enough stock to retailers on the ‘front line’ or to meet the number of online orders, demand drops and retailers can be left with an excess of inventory. For the fashion industry, the ‘expiry date’ for apparel and clothing is even shorter as trends abroad dictate what is and is not in demand. The dress, shoes or shirts in stock may be deemed irrelevant by the market and so retailers are left with depreciating stock. 

Another problem viral shopping creates is an influx of stock returns. If just three percent for example of Kylie’s sell out lip kits needed to be returned this would add not only significant costs, but complexity too to the supply chain. The returned stock would likely need to be destroyed creating sustainability concerns as well.

Matching supply to demand is the key challenge for retailers. The difficulty of this issue is compounded by the current pandemic situation we are in. 57 per cent of businesses are still experiencing some form of supply chain disruption in Australia as indicated by research from the Australian Bureau of Statistics. Retailers are a chief victim of this disruption too, with 19 per cent still affected by a great extent. The result of these disruptions has transformed the way retailers and businesses operate. Ordering processes, suppliers, product ranges and more have had to change, and supply chains are in a foreign territory. Logistics professionals and retailers are using processes that are new and haven’t quite adjusted to yet, so meeting the challenge of matching supply to demand is intensified. 

There needs to be a movement towards creating supply chain resiliency to adapt supply effectively to this demand. This is a view shared by the logistics industry as well, with 75 per cent of supply chain professionals expecting to make moderate-to-extreme changes to improve supply chain resiliency (The Top 5 Trends shaping Survival and Success by BluJay Solutions). Effectively, this means enhancing existing or introducing new solutions that can help retailers manage supply and demand effectively.  

Artificial Intelligence (AI) and Machine Learning (ML) will be the key tools to develop this resiliency. Together, they can optimise existing processes, providing visibility over the supply chain process leveraging data and tools to also assure quality control regardless of disruptive events like increased restrictions or shortages. Through visibility, brands can provide consistency between supply and demand, knowing what is needed at every stage through accurate information in this ‘asset less state. This asset-less concept optimises inventory to the correct demand, mitigating risk to retailers and giving them the knowledge when to increase stock when a viral shopping event does occur.

Importantly, AI and ML will also provide accurate real-time information over the delivery process. This includes the overlooked ‘last-mile stage of delivery, as customers and businesses should know where the order is with accurate, informative, and easily understood updates. Visibility will manage the expectations of customers through disruption and other issues. 

Panic-buying. Viral shopping. Whatever form it is, retailers will continue to be tested. However, regardless of the form, supply chains have the opportunity to move from fearful of such demand, to managing the customer’s expectations through the right solutions. 

Paul Soong is regional director for Australia and New Zealand at BluJay.