Supply Chain Council of European Union |

Consumer goods firms will step up direct sales in 2020, predicts Software AG official

Consumer goods firms will increasingly seek to cut out retailers, and instead go to customers direct without any intermediaries, Software AG’s global industry director Oliver Guy says, looking ahead to changes in tech retail practices next year.

Guy’s employer, Software AG, has an unusual distinction: it has been in the business of providing integration software for a shade over 50 years. Few software companies last that long without looking to be acquired.

Guy pointed to the example of Dollar Shave Club — since acquired by Unilever — which was offering razors direct for as little as US$1 a month. “Even Lego are considering offering a rental service for its toy bricks,” he added.

He predicted that successful retailers would build ecosystems by speeding up the use of value-adding partners who could supplement their products with a unique service. They would then add new channels for selling their products.

Another trend he sees coming is the use of IoT by retailers to accentuate the way they are different. These IoT initiatives would be connected to others in order to benefit from the “network effect”. This would add to the automation and speed of decision-making.

“Technology will sit at the top table organisation-wise in the New Year, after years of underestimating the importance of IT in enabling new digital business models,” Guy predicted.

“Technology leadership will start to bring innovation to the rest of the business, as visionary CIOs contribute new ideas. Retailers will need a flexible IT architecture and approach to support this.”

His final prediction was that environmental responsibility would serve as a point of difference for retailers.

“An increased focus on the environment informs consumer choices and retailers will respond accordingly. Amazon has ordered an electric fleet of vehicles in response to concerns over its supply chain’s carbon footprint,” he pointed out.

“We have seen retailers discontinue plastic cotton wool buds and plastic straws due to concerns about littering the ocean. Smart retailers will see technology as a tool to help. This could be either an IoT or real-time AI response to supply chain issues, improving data visibility that drives decisions or using process mining to understand and eliminate delays that have an adverse environmental impact.”


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