Retail supply chains: flexibility 2.0

Amid rising costs and economic uncertainty, retailers need nimble supply chains fit for a new era of disruption. By Daniel Wood and Zoe Wakeham, Consultants, Consumer and Retail Practice.

Donald Trump is famously partial to a game of golf. But the capricious president whose yo-yoing approach to tariffs has caused international turmoil may have retailers thinking of a different pastime – yoga – because more than ever, flexibility is the name of the game.

The need for supply chain flexibility is hardly new. The pandemic and war in Ukraine shook up sourcing and logistics across the globe, presenting huge operational challenges. Some businesses adopted strategies such as ‘friendshoring’, aiming to reduce risk by moving operations to countries considered more economically and political compatible. Others went big on resilience and backup sourcing plans.

But tariff uncertainties (and with them a blurring of the terms ‘friend’ and ‘foe’) have changed the world once more. Retailers are scrambling to find the best response and to ensure their supply chains can cope. Let’s call this new era flexibility 2.0.

Fashion retailer Superdry was quick to halt shipments to the US of clothes made in China because the imposition of tariffs meant this was no longer profitable. Waterstones likewise put a hold on orders to the US. Next, meanwhile, is considering whether to set up a corporate entity across the Atlantic to reduce its potential future exposure to import duties.

Investment in flexibility 2.0 is clearly a case of needs must. Yet it comes at a time when UK retailers are under pressure from increasing labour and product costs. The British Retail Consortium warns that a rise in the National Living Wage and changes to employer NICs will together cost the retail industry over £5bn a year. And from October 2025 this will increase to £7bn when the new Extended Producer Responsibility packaging tax comes into force.

Challenges abound, and as ever there will be winners and losers. Hiring the best people has a big bearing on success and the amount of uncertainty around provides a strong argument in favour of interim management talent in areas including finance and supply chain.

The continual moving of goalposts, in part due to erratic decision making in the White House, means making permanent appointments in some areas of your business now comes with an added element of risk. Sought after expertise may become less relevant in an instant. Particularly galling if it has taken six months to find someone.

Interim hires help businesses pivot fast – and they are easier to replace if circumstances change. And change they will. Retailers are wrestling with some major supply chain trends and exactly how these will pan out is far from clear.

On the one hand, there is a move away from globalisation to a more localised approach. On the other, will countries be flooded by Chinese products redirected away from America because of the trade war between the world’s two largest economies?

Given the speed at which the tariff situation is changing, it is possible that some of what we have written is already out of date. But that’s life at the moment. And hence a compelling argument for flexibility 2.0 and interim talent to help make it a reality.