Insights on the Retail industry

Supply chain pressures for the retail industry in South Africa have remained high since Covid-19 triggered repeated disruptions, and extreme weather conditions, geo-political conflict and trade wars continue to add to the complexity. Nearly 50% of global CEOs told a survey towards the end of 2024 that they had to adjust supply chains because of conflict while 75% predicted climate risks would impact their supply chains before 2025 ended.

A cross-section of DSV's retail logistics customers in South Africa, though, put infrastructural challenges front and centre in a recent inhouse survey and said port congestion and customs clearance were the most pressing issues they faced. Infrastructure constraints complicate an already fragile macro-economic environment sensitive to global market fluctuations, currency instability, and domestic challenges such as load-shedding, high unemployment rate, and inflation.

Adapting to global trends with an eye on what's shaping the future of consumer logistics was next, followed by navigating supply chain disruptions. Digitisation, AI and decarbonising logistics - essential to combat climate change and sustainability - made up the top 7 issues.

The big shift - the end customer

Today's retail customer is better informed, more connected, more impatient, and more vocal than two decades ago. Technology keeps raising the bar, and now the "standard" of service from 2000s would often feel slow, impersonal, or opaque to a modern shopper. Twenty five years ago, customers accepted some friction in shopping because they had fewer options and slower information flow. But today, customers expect frictionless, fast, personalised, and transparent interactions - and will quickly switch to competitors if that's not delivered.

Two decades ago, South African logistics providers were mostly behind-the-scenes facilitators, but today they have become front-line brand ambassadors, deeply tied to the retailer's customer promise. Retail's "speed, transparency, and flexibility" expectations have made the supply chain part of the customer experience. They are now speed-critical, tech-enabled, brand-visible partners delivering a key part of the customer experience.

If it is a battle to get cargo out of the port where the retailer cannot get it on to a shop shelf, then loyalties shift, and survival could be at stake if unresolved. And that is just in the physical space. The Retail industry in South Africa itself has changed radically and the online store has ramped both opportunity and risk for physical retailers and supply chains. Technology has collapsed geography and time, and today's customer can order directly from an online store and expect fulfilment from China within a week.

There have been many shifts in a shopper's experience, and they have impacted the retail industry, supply chains, media, and brand management - as the table below shows:

Anticipating different scenarios - and having the capability to pivot quickly

Recognising supply chain challenges is one thing, but differentiation in the market place requires a response, and the big step has been in scenario planning. Retail supply chains must anticipate what might happen and have plans in place for each scenario.

Operational flexibility is a defining competitive advantages. DSV's ability to pivot - whether redirecting shipments to neighbouring ports like Mozambique or Namibia, or reconfiguring transport routes - means bottlenecks can be avoided or mitigated.

Cost is equally important. Decision-makers must identify solutions that balance efficiency and affordability, and customers need a spectrum of options so they can make informed choices about rerouting or accelerating shipments based on real-time market conditions.

We own the problem, and it's ours to fix

"We need to find the best possible solution at the most competitive price, but the bottom line is we have to move a customer's cargo, no matter what. We own the problem, and it is ours to fix", shared DSV's Regional Vertical Lead for Consumer and Retail. DSV has the scale and global footprint to set up freight corridors quickly, or arrange our own charters or switch from one supply hub to another. We have proved we can pivot quickly, and this is partly because we have the feet on the ground across the globe that makes all the difference.

Digitisation meets technological disruption

The rise of automation, artificial intelligence, the Internet of Things (IoT), and blockchain technology is helping supply chains meet the challenges from retail stores and customer expectations, which become exponentially more demanding as customer platforms keep improving their retail experiences.

Simply put, visibility provides comfort to customers, especially during a time of disruption. Customers can monitor cargo movement, track deviations, and confirm deliveries to DCs. DSV's commitment to leveraging digitisation speaks not only to operational efficiency but also to strengthening customer relationships through transparency and responsiveness.

The table below gives an overview of how technology and digitisation have changed the way supply chains work over the last two decades:

Overcoming infrastructure hurdles

Well documented issues challenging supply chains in South Africa include aging infrastructure and underinvestment, port congestion and inefficiencies, labour challenges, slow customs and clearance processes and limited cold chain logistics.

Benchmarking South Africa's ports - which are strategically located on one of the world's busiest shipping routes (between Asia and Europe via the Cape of Good Hope) - against global standards (see table below) helps provide context and clarifies where performance is acceptable and where gaps exist - and finding solutions to port delays for South African retailers.

A task team, initiated by the government, continues to drive improvements but operational delays are unlikely to be significantly reduced in the near future. For DSV, maintaining business continuity demands constant vigilance and contingency planning, particularly in navigating port, customs, and regulatory challenges.

Going forward

Scale is increasingly critical. DSV's continuous growth in volume and capability has been significantly enhanced following the acquisition of Schenker, but retail supply chains have changed in other ways too.

Today, DSV has become part of the end customers' experiences. Stocked shelves, parcel tracking, and sustainability have become everyone's issue.

So what of the future? Retail digitisation strategies need to integrate fully with supply chain functionality, logistics infrastructure has to anticipate demand and be flexible to accommodate disruptions, and all of this requires innovation, investment, the ability to act quickly - and the intuition to second guess the future.