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The weekly dispatch: Shopify embraces new hardware, Nike faces growing inventory concerns

Illustration of a person standing at a desk next to a large monitor displaying a pair of shoes and the text ‘hot sale, shop now, up to 50 percent off, limited time only’.

It’s clear that the ripple-effects of the Covid-19 pandemic are far from over. Multiple brands across the country are grappling with excess inventory; shifting consumer demands and expectations are forcing e-commerce and brick and mortar businesses to shift their market strategy; and new technology is coming to the forefront to help with these transitions. 

We read about all these changes and demands in this edition of the Weekly Dispatch: 

Nike’s bloated inventory, causes stocks to tumble

Customers shopping for Nike shoes.

On an earnings call this past week, executives admitted to lower-than-expected Wall Street gross margin projections due to bloated inventory and subsequent liquidation efforts, which caused shares to fall a little over 10%.1

To add insult to injury, the rising of the U.S. dollar internationally has hurt Nike sales in Greater China, its largest market in terms of revenue.

Retail giant Nike is yet another company in recent months to report being in quite the inventory conundrum.2 Their inventory in North America grew by 65% due to late season deliveries that are now just arriving, as well as early orders for the holiday season. This combination of events is driving the decision for massive markdowns to clear stock.

Despite these disruptions in stock prices and net income, which also fell 22%, Nike remains optimistic for the future.  The strategy is to trim as much inventory as possible now, to help them reset for the upcoming quarter.

Analysts from the Telsey Advisory Group, led by Christina Fernandez said in an email, “they are encouraged by healthy demand, as well as Nike’s strong product pipeline and other factors. All in, the [first quarter] report and revised [fiscal year] outlook were incrementally negative, but we believe Nike is taking the right actions to realign inventory levels and emerge in a stronger position.”

Shopify announces POS Go hardware

Two people tapping phones together in order to transfer money.

With the popularity of in-store retail returning and sales expected to rise this holiday season, Shopify is ensuring they remain competitive with a revamped version of their point-of-sale (POS) system, POS Go.3

A departure from their Shopify POS app, POS Go is a compact and transportable handheld device that can be used independently of a cell phone or computer. This versatility allows retailers to meet consumers wherever they are, whether on the show room floor or at curbside.

This new portable device even allows merchants to monitor sales history, inventory, consumer’s purchasing activity – right at their fingertips.

The Canadian e-commerce conglomerate has been adding new services and features to boost their sales and match the growth achieved back in 2020. POS Go is the latest endeavor towards this goal since reporting a net loss in sales for the first and second quarter of 2022.

There’s a brick-and-mortar arms race underway, and Shopify is one of many within the e-commerce space ensuring their merchants will be able to meet consumer demand in this pivotal moment of changing consumer behaviors, driven by digitally-led expectations.

The power of AI in aiding global supply chain challenges

Overhead view of trucks and vans driving on a highway with hexagonal icons.

We’re living in the post-pandemic era, where the ripple effects of massive supply chain disruption are still being felt across industries.

Experts within the supply chain industry have been forced to consider this ‘new normal’ and what proactive measures need to be considered to protect supply chains and mitigate the effects of another potential global crisis in the future.

Supply chain professionals believe incorporating AI (artificial intelligence) with human expertise, experience and skill could be the key to properly forecasting supply chain dangers and having implementation plans in place at the ready.4

Some of the AI systems evaluated as considerations for the task:

A digital twin – A virtual imitation of a real supply chain with all of its mechanisms, warehouses and materials.  Allowing for a variety of simulations of possible scenarios to be conducted.

The Internet of Things (IoT) – Sensory objects designed to connect and exchange data over the internet with other objects without human interaction.  This type of device would be used to detect if another machine within the supply chain ecosystem is malfunctioning, needs attention or needs to be replaced.

Machine Learning – A system that examines a massive amount of data in real- time and gives analysis and alerts on probable supply chain issues.

It’s become clear that supply chain disturbances, like what happened during the Covid-19 pandemic, are not a thing of the past or a rare occurrence.  The future is here, and AI offers the technology needed to supplement human capabilities as we progress towards the future.

Small businesses at the brunt of U.S. warehouse squeeze

Overhead view of a warehouse with trucks docked to load.

Industrial storage facilities within the U.S. are experiencing a capacity crisis that’s adversely affecting small businesses.5

With stockpiles of inventory by many large retailers on the rise, there is a bigger demand for more space to store excess inventory.  

This inventory bloat is a major issue with many big box retailers, who are forced to contend with the delayed arrival of outdated seasonal merchandise at the same time as new holiday products are arriving – compounded by a decline in consumer spending due to inflation and worries of a possible recession. 

Smaller companies have to either pay higher storage premiums, driven up by the demand of the larger merchants – or find another location altogether.

A similar situation happened at the height of the pandemic when shipping carriers hiked up rates, causing smaller ship transporters to bolt, giving larger customers an easy in.  

The scarce warehouse space is not easing any time soon, with major ports like LA, Long Beach, New York and New Jersey feeling the tightest capacity constraints.

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