Ted Baker is the canary in the coal mine for retail supply chains

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When you see the statement “trading over… the Black Friday period was below expectations” you start to pay attention as a journalist in the world of logistics and supply chains. The words Black Friday are normally followed by “particularly busy” (John Lewis); “biggest ever” (Boots) or “record volumes” (DPD).

It would be incredibly simplistic to blame the current woes at Ted Baker on a poor Black Friday. Clearly there are systemic problems that lead up to the poor execution of such a trading period, across such functions as marketing, property footprint expansion (or indeed contraction), product availability and volumes and changing customer habits.

Today it was basically forced to admit it was not making the right margin on its sales and it was not selling enough of the stock it is sitting on.

Let’s not forget that Ted Baker doesn’t actually know how much stock it is sitting on, as it currently is paying for Freshfields Bruckhaus Deringer to figure out exactly where £25 million (or is it £20 million?) of stock that appeared on its balance sheet actually is….

No wonder its share price fell 36% following the news its chief executive would depart.

Christopher Walton, Editor, Logistics Manager

It’s a cheap shot to laugh at the missing inventory… retailers sit on large amounts of inventory at any one time (we shouldn’t forget about the billions that H&M is sat on for example) but it’s a warning for the sector. Faced with competition from digital retailers, with lower costs and more efficient supply chains, a mid-cap retailer has to spend million upgrading its logistics infrastructure and supply chain in order to compete, all the time being dragged down by high cost bricks and mortar retail locations (and an especially punitive and ill-considered taxation regime in the UK). You wouldn’t wish this confluence of events on anyone running a business.

Retailers should be looking at Ted Baker as the canary in the coal mine. As we approach a new decade if you’re not planning to digitise and automate your logistics infrastructure then you face a similar fate. And frankly if you haven’t even started a plan to do so then you’re accelerating your own demise.

As we approach the new decade, supply chains will be under even more scrutiny. In order to combat falling growth and diminishing profit the attention at every retailer, especially in fashion, will be on the supply chain offset those declines. Bulky retailers will need to trim some weight and get lean in the New Year. Good luck.

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