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Will a pandemic bring manufacturing home?

Unravelled consultancy founder and director Vanessa Thompson shares her expectations for how Covid-19 will affect retailers’ supply chains in the coming months.

This week has been an unprecedented week of announcements, and our ‘life as normal’ is changing. The Covid-19 virus has come and taken hold, and is now disrupting lives, businesses and politics globally. These are scary and unknown times, and they are threatening to change business forever.

The virus has nearly affected every industry globally. For the fashion industry, it has been an uncertain and worrying time. Supply chains have been further disrupted after Chinese New Year; travel bans have interrupted sourcing trips and events, including fashion weeks; retailers are temporarily closing their brick and mortar stores globally to prevent staff from contracting the virus; hygiene and cleaning routines in still-open stores have increased dramatically; and now self-isolation, quarantine and social distancing will interrupt staff across the whole business. Will this be the start of consumers and businesses sourcing and supporting local? And will we see a growth in New Zealand manufacturing once again?

New Zealand retail businesses usually plan for delays and other issues over the Chinese New Year holiday. This year, the disruption in China has lasted a further four to six weeks. Retailers will either have to slow how much merchandise they move through now or pay to airfreight goods into New Zealand so their shelves are not empty in May/June. One positive outcome of the pandemic has been the decreased carbon emissions globally due to the shut down. However, I am worried that if we all now change to moving stock by airfreight to get goods in quicker, then we will quickly replace those emissions. Retailers could look at delaying mid-season sales and retaining stock so that their stores remain full of product, or staggering their deliveries so there is smaller drops of newness each week to keep customers engaged.

The impact of isolation has not yet taken its toll, and time will tell if consumers continue to shop in stores and malls, or will move to online to avoid being in large crowds. Consumers have shown that they are not afraid of clearing out supermarket aisles in person, so maybe a leisure activity such as shopping may still entice shoppers. As long as stores are sterile and clean, and retail staff do not present any symptoms of being sick, customers might remain loyal to local businesses. It will be interesting to see whether overseas retailers in the New Zealand market are more affected by the supply chain issues due to lockdowns in Europe and the US. This could give New Zealand retailers an advantage on the ability to move quicker than these retail giants.

There will be many changes over the next year with businesses looking to diversify their supply chains, and potentially move manufacturing back home. Consumers will be learning to think ‘local’ in terms of travel and holidays, so will this also lead to the growth of New Zealand-made products that will be more resilient to events like this in the future? 

In a climate where customers are already demanding transparency and traceability of their products, bringing manufacturing home will enable a better consumer connection, and the growth of ‘New Zealand made’ branding and support. It will give retailers flexibility on delivery dates, and will help them to lower their transport costs and carbon emissions while also supporting the local job market and economy. 

Although there are challenges to moving local –  such as the loss of skill sets, and minimum wage rises – there is an opportunity with the help of both the government, technology and innovation to enable a change, and help businesses stand stronger in the wake of another global disaster.

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