Retail: Taking stock of the supply chain

It has been a difficult year for retail. While demand has returned to many categories, macro-economic conditions have created market-wide challenges to stock availability, import and transport logistics. As an example, container costs have tripled since the end of last year and port transit times are at 5-year highs. The result has been increased prices and delayed deliveries, increasing supply chain cost, transport time and disruption.

Customers understand that these are unusual times, but there is an expectation that there will be a return to normal…the question is when. Managing the demands of consumers (e.g., visibility of availability, certainty as to timings), fuelled by pent up demand and stock shortages, with a compromised supply chain is challenging and set to continue for some time. Last year, we suggested in our Covid 19 Industrials briefing that supply chains were likely to shift from a just-in-time philosophy to a just in case mindset. The result is dual supply, re-shoring, and repatriation of critical component supply. In this briefing, we share where investment teams should focus to create value as consumer products businesses throughout the value chain continue to grapple with compromised supply chains.

Niche manufacturing

Wholesalers have been particularly hit by transportation issues (both price and availability) and many have faced production issues in China. Some are starting to look to source more of their supply and/or production nearshore and onshore to help increase reliability of supply. There are also longer-term concerns about China reallocating resources to its domestic market, and consequently, regions such as Eastern Europe are increasingly attractive alternatives. While unit pricing may be higher, this is often offset by reduced risks associated with sourcing from further afield. On/nearshoring can also help with ESG issues, as supply chains are shortened, more easily verified and use less transport.

Warehouse and distribution

Distribution and warehousing are in high demand, and logistics facilities had the second-highest sector prospects after data centres in PwC’s Emerging Trends in Real Estate: Europe 2021 report. Space is now a premium for many businesses and innovative approaches to forecasting, inventory, and warehouse automation will be required. As a related matter, packaging is likely to become an increasing area of focus, as is the ability to ship replacement parts for those damaged in shipping, rather than replacement of entire products. Wholesalers need to continue to work closely with third-party logistics companies to ensure a joined-up approach and to reduce damage in transit. Minimising damages reduces admin costs of parts in the supply chain and ultimately improves customer ratings on consumer websites such as Trustpilot.

The last mile continues to challenge retailers and we believe there is a sweet spot at the confluence of distribution, technology and sustainability where value can be created.


Delayed delivery times are a frustration for the end consumer, and are expected to remain at high levels over the coming months. Real-time stock availability helps manage expectations and reduce complaints. The technology is available; however, uptake remains patchy. There are opportunities for smaller companies to differentiate themselves through better use of existing technology, particularly in the last mile.


Consumers are moving away from buying sustainable products to buying from companies that have sustainable practices. Responsible sourcing through to end of product cycle are all under increasing scrutiny. Whether businesses are motivated to enhance their brand or for ESG reasons, companies need to address CSR confidently, consistently and sincerely.

Armstrong has worked on a broad range of deals in retail and consumer in the last year, including Seraphine, Julian Bowen, Hartley Botanic, and CBL each of which has involved developing strategies for managing these issues. Speak to me or a member of the team if you would like to know more.

Peter Cookson, Managing Partner

+44 (0)7871 425 467
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