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Covid-19 impact on retail supply chains

Full report: Covid-19 and the Future of Retail Supply Chains

Covid-19 impact on retail supply chains

2 minute read

The COVID-19 pandemic has caused a sudden and severe impact on international trade, investment and global economic growth. As nations grappled with the impact of the virus, factory closures throughout international markets caused a ripple effect across an expansive supply chain network, quickly leading to disruption across the world.

This is the first of four articles based on a wider piece of research on Covid-19 and the future of retail supply chains by Retail Economics.

Retailers across Europe experienced a significant shock to both supply and demand on an unprecedented scale, compounded by government measures which restricted the movement of people and goods. World exports fell as certain governments imposed unilateral export controls on specific goods to protect domestic supply, while others reduced tariffs to encourage trade. Meanwhile, tighter border controls slowed the ability for goods to seamlessly transit through countries.

 

World exports fell by 19% from December 2019 to May 2020

Covid-19 impacts on world exports May 2020 - Retail Economics

Source: CPB World Trade Monitor

 

While these measures were temporary, the impact across supply chain networks could cause longer-term distortions. In this series of articles of Covid 19 and the future of supply chains, we will look at the supply chain issues that retailers are facing and will continue to face as we move out of the pandemic, as well as how these retailers can go about adapting and evolving their supply chains to make them more resilient.

[continued below]

 

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This work forms part of a wider piece of research and is a downloadable in pdf format

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Falling global trade 

Global trade volumes fell sharply in the first half of 2020, pulling down global economic growth.

The International Monetary Fund (IMF) forecasts a decline in global growth of 4.9% in 2020, although the Euro Area (-10.2%) and the U.K. (-10.2%) are expected to experience sharper slowdowns. World exports contracted by 19% in the six months to May 2020 and are expected to fall in the region of 13% to 32% across 2020, according to the World Trade Organisation (WTO).

 

World global trade COvid-19 impact - Retail Economics

 

As the flow of goods seized up in countless locations, many households across Europe struggled to access basic consumer products in the immediate aftermath of the pandemic. In some parts of the market, the supply-side shock combined with a surge in demand, especially across grocery supply chains. This forced retailers and brands to acknowledge the fragility of some modern supply chains.

Against the backdrop of sustainability, technological advancements and a more sensitive geopolitical environment, the impact of COVID-19 has acted as a catalyst to accelerate underlying structural change. International supply chain networks are in the midst of a fundamental shift and retailers must work quickly to embrace, adapt and evolve when sourcing products if they are to overcome the present challenges.

Things to do now

Explore the next article in this series here which looks in more detail at the five key factors which will shape the development of supply chains in 2021 and beyond.

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Found this short article interesting?

This short insight article forms part of a thought leadership report entitled “Covid-19 and the Future of Retail Supply Chains” produced by Retail Economics. It explores industry structural changes and contextualises the impact of Covid-19 on supply chains across the European retail industry. For retailers and brands seeking valuable insight into the impact of the crisis across Europe, the full report provides data-driven insights and guidance for action.

View Full Report Here

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