Tariffs and the upcoming holidays are forcing retailers to stress test and prepare their supply chains, according to experts at a September 10 Supply Chain Dive event. Here are the top takeaways:
Retailers are increasingly using digital twins (i.e. virtual replicas of supply chain systems) to test scenarios, stress-test plans, and forecast outcomes. This is like a testable, tech-enabled version of a sensitivity analysis. If your company can build or buy a sandbox version of your supply chain, you can test what happens when 1 or 100 containers get delayed during peak season, or project what a 3 day snowstorm in Denver would do to your holiday delivery plans.
Retailers are shifting toward focusing on “hero” SKUs (the few products that generate the bulk of sales) and trimming less productive inventory. Customers like a wide assortment but it’s expensive to develop and warehouse. The Pareto rule applies. For example, Levi Strauss is reevaluating its assortment productivity so it doesn’t depend on discounting to clear inventory. Hasbro is prioritizing SKUs sourced from countries with more favorable tariff or supply conditions (e.g. India over China), even if they are older designs. There’s also talk of heightened emphasis on private label or value-oriented SKUs, given consumers tightening their spending.
Finally, retailers are moving inventory closer to the end customer—whether via distributed fulfillment centers, leveraging stores as mini-hubs, or using third-party logistics. The goal is to reduce lead times, improve agility, and mitigate disruptions in last-mile delivery.
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