With nonessential retail shut down for the full month of April due to the coronavirus, US retail sales nosedived in discretionary sectors, following deep declines in March. Lower levels of food stockpiling by consumers also saw growth slow in the grocery sector.We present an edited version of our conversation with Jeff Brown, President of NFI and supply chain expert, from the Coresight Research & Blue Yonder Open for Business webinar held on April 22, 2020.

Introduction

Deborah Weinswig: Good morning and welcome to Open for Business. I'm your co-host, Deborah Weinswig [CEO and Founder, Coresight Research], and I'm honored to be joined by our other co-host, JoAnn Martin. JoAnn is the VP of retail at Blue Yonder and has extensive strategic retail experience and a proven track record across apparel, footwear and accessories—including with L brands, DSW and Luxottica. In her role at Blue Yonder, she has been an industry thought leader for retail. Her expertise also includes merchandise planning, item planning, assortment planning, allocation and omnichannel inventory enablement. I'll turn the call now over to JoAnn for some opening remarks.

JoAnn Martin: Thanks so much, Deborah. I'm excited to be here today. We are seeing a lot of themes when it comes to being in retail and in supply chain. The major theme we hear constantly from retailers is supply chain resilience. We talk about supply chain all day, but the reality is, that's where the focus is right now. There are four major areas in which we are seeing this come across.

Retailers are trying to figure out, “Where is my inventory within my supply chain; how do I figure out where that inventory is; and how do I get it into my assortments?” Another place we see it is in out-of-stocks and managing inventory and assortment plans.

So, those are two major discussions, but not to be forgotten are things such as pricing.: “When I come out of Covid-19—and we will come out of Covid-19—how should I be pricing my goods; how do I prevent myself from entering a price war; and how am I leveraging technology to do that?”

Last, but certainly not least, is workforce. We see articles all day long about workforce in distribution centers as well as in stores, when they start to open. Those are really the four themes that we're seeing as prevalent right now.

[caption id="attachment_109817" align="aligncenter" width="450"] JoAnn Martin highlights the key theme of supply chain resilience in retail during Covid-19
Source: Coresight Research[/caption]  

Deborah Weinswig: That's very helpful. Thanks, JoAnn. We are honored to have as our special guest, Jeff Brown. Jeff is the Vice Chairman, President and Co-Owner of NFI, which is a fully integrated supply chain solutions provider. Jeff is directly responsible for the company's real-estate team and global freight-forwarding departments. He has a real passion for innovation, based on many of our conversations. He also focuses on efficiency—and has some great insights there. Jeff also has a huge heart when it comes to his employees.

Today, we are going to discuss how Covid-19 is affecting the retail supply chain, how retailers and NFI have changed and adapted from week one of the crisis to now, and how and when retailers should begin thinking about opening for business. As always, we will have a video of this webinar available on our site, and we will launch some poll questions after we start the call.

Lastly, please use the Q&A function at the bottom of your screen during our conversation if you would like to ask a question.

With that, I'm going to kick it over to Jeff. Thank you so much for joining us today. Can you please tell our audience a little more about NFI?

Jeff Brown: Morning and thank you, Deborah, for having me on the call here today. It's an honor. Real quick, just a little bit about NFI. We are a family-owned company that is in its 88th year. My two brothers and I make up the third generation of ownership of NFI, and we each have three kids—so there are nine possibilities for the fourth generation!

To tell you exactly what NFI is, we are a transportation company and a distribution supply chain company on the trucking side. We operate about 4,000 trucks domestically in North America. A lot of DC [distribution center]-to-store for retailers, and in today's world, a lot of DC-to-consumers in many cases. Our trucks typically go out 200 miles or less, but there is also a significant amount of business that goes beyond 200 miles.

We also have a non-asset portfolio that we started about 10 years ago, because our clients said to us, “Okay, NFI, we'll give you all of our gravy business short haul out in back, but you still have to handle our business overall, wherever it goes throughout North America.” This non-asset portfolio gives us a view not only of what's happening with our customers but also of what's happening with transportation overall in the marketplace, especially since we ended up hiring all of our competitors to move the business that we don't move with our own trucks. As you know, today, there is a lot going on specifically with the coronavirus and demands.

Then there’s also the price of oil and how pricing is fluctuating every day for transportation. Tying that in is our third line of business, our warehousing business. We operate 50 million square feet throughout North America for Fortune 2000, Fortune 1000 type clients. Lowe's is one of our largest customers where they are actually the labor inside the warehouse.

We are bringing the goods in, unloading them, sorting them, packaging them out to the customer, and we still have been able to do this during the virus. Fortunately, we have maintained most of our workforce through this time. So, with the warehousing business, probably half the goods or three-quarters of the goods that come into these warehouses come from overseas.

We started an international business probably about five or six years ago, and we now have an office over in Hong Kong so that we can negotiate with the steamship lines over there and get cargo space on the ships. In the same way that we have a broker non-asset component over here in the US, we have a broker operation where we hire trucking companies to pick up the goods at the factories that are producing the goods, bring them to the port and put them on the ships, and then we manage the flow to the US ports.

The next piece is when we get to the US port: We have a whole division called California Cartage that we bought three years ago that has 850 drivers across LA [Los Angeles], Savannah, Houston, North Folk—all the major ports in the country—that pick up goods at the port and brings them to local warehouses or transloads the goods from containers into vans and sends them throughout the US.

Tying that all together, just to give you a vision, we have the visibility and we have the technology that shows our clients if their goods are in Asia or if their goods are on a ship, or if their goods are at the port, or if they're in our warehouse, or if they're on one of our trucks, or if they're on one of our partner's trucks. The idea is that we are letting them have as much visibility into their inventory as possible, so that they can make decisions about where their goods are selling and where they aren't selling. Hopefully, we can help provide that information to them, be timelier and reduce inventory costs for them along the way.

Tying into all this is that, as we got into the warehousing business, the last component—and probably one of the bigger growth components for us—has been the real-estate portfolio. So many customers are trying to relook at their supply chain, and because of the new channel of e-commerce, we've been able to say, “Why don't we put more of an ownership position in the real estate that our customers are looking to go to?” We have a whole engineering group that optimizes for our customers; the group shows where [our customers] should be located based on where their markets are. And so today, we have a portfolio of about 15 million square feet, a property management team, a development team and a finance team—we’re working on real-estate opportunities. So, what we're trying to do overall is offer a total solution for our clients.

To give you an idea of the depth and breadth of our organization today, we probably generated a little over $2 billion in revenue this past year, and then we’ve got a real-estate portfolio today that's probably close to another $1 billion on top of that. So, we're very excited to be here, and obviously it's a chance for us—in this kind of environment—to really excel and hopefully bring some value to our client base out there.

Now, that was long-winded, but I felt like I had to start with that!

Supply Chain: Current Challenges and Technology Innovations

Deborah Weinswig: That was great. So, what are some of the biggest changes that you're seeing right now in supply chain? Open-ended question, but…

Jeff Brown: I would say this: The demand is up and down—it's unpredictable. Right now, many of our retailers that have been affected by this virus have canceled orders, have pushed out orders. Trying to forecast demand and forecast our workforce to meet that demand has been up and down; it’s very challenging, but we are there to support our customers as best we can.

Another big thing that has happened in the supply chain is that there is now a supply chain that has developed unto itself to make sure that our workers, our drivers, our frontline people and the warehouses are being treated fairly and safely with masks, with sanitizers, with gloves—where appropriate—so that they are protected while trying to eliminate fear in a society where you need to keep social distancing. But it's awfully tough sometimes when you've got hundreds of people in a particular building to make sure that social distancing takes place and that everybody feels good about it. It's a change of how you're handling your lunches. How do you handle your breaks? How do you handle an entry and exit? The whole supply chain has changed dramatically because of this, the virus, with regard to how you manage your people in addition to handling what's happening with our customers.

JoAnn Martin: Jeff, one of the things you were talking about at the beginning that I found really interesting is your ability to provide, through technology, visibility on orders to a lot of your customers. When you think about that kind of technology and where it sits today with all the disruptions we're seeing, what's the area in which you wish you had more technology or, rather, is there an area that you wish the technology was more developed than it is today?

Jeff Brown: That's a great question. We feel that if more of our software was cloud-based, it would be better for us—that is the future. The flexibility for people throughout our organization and our customers to access the cloud is a heck of a lot easier than some of the technology access that we have today. We are working on that; we've got a great team that is working on that transition.

JoAnn Martin: How do you see your relationships with technology providers shifting during this time when your expectations of their technology is also shifting? Or do you think the current situation dictates that?

Jeff Brown: I do think that’s what's happening with technology providers. The world is changing so fast, and the technology we use is changing even faster. A lot of the contracts and a lot of the pricing, we feel, has to change because of the contracts where [technology providers] want you to go in for three-year, four-year and five-year deals—it’s crazy to do that when the world is changing so fast and technology improvements are happening every day. So, we think contracts are going to be much shorter.

We also believe that pricing needs to become tiered based on success rates; that has to happen. There will be also more transparency between the vendor and ourselves while we work together to achieve a common goal—transparency on both sides.

Inventory Management during Covid-19

Deborah Weinswig: Jeff, I know you are very close to many of your clients as you talk to them. What services of yours are they finding most important right now? Can you also talk about your view on inventory?

Jeff Brown: I think that is the biggest area of opportunity for our clients today and really during this pandemic. We have been challenged by it for our clients, for our engineering group of close to 50 throughout the country. Our clients are asking us to relook at their business because costs are so important to everybody. How do you cut costs in an environment like this? How do you see the future?

I can give an example. We do a lot of work for a company called Hasbro Toys and the toy business. Right, wrong or indifferent, it probably is not considered essential, or at least it's not the first thing. But when the country does open up, people are probably going to buy a lot of toys and, if they do buy toys, the toys that they're going to focus on are primarily not the higher-priced toys since so many people are out of work, so maybe the board games come back as opposed to the electronic games. We operate 2 million-square-foot warehouses for [Hasbro Toys] around the country, and they are concerned about them. How do they preserve their cost structure during these times?

We were able to optimize, through our engineering group, that instead of taking up as much space as they currently are, it's much cheaper to go vertical versus horizontal. So, now we're going to rack the warehouses, and they're going to open up a couple-hundred-thousand square feet in each building and have significant savings. They are extremely excited about this solution for them. That's just one example of a solution that we try to offer to all of our clients, either through technology or tools in the engineering group that really bring value to them.

Hopefully, they are reducing their costs and we are showing our value both as a vendor to them and as a partner to them. Again, I've said it earlier, there is a transparency with our customers and with our vendors today that is much different since this pandemic started that I think is great for us to really bring value to the customer.

Deborah Weinswig: In light of that, do you feel your customers are innovating at the same time? You're showing some amazing innovation as it relates to your relationships with them. How are they changing their relationships with their customers, and how does that impact NFI?

Jeff Brown: I would say that they are changing their relationships with their customers, with how we can deliver, with how we can source the goods for them. Information is key in trying to help them forecast their business. We can only do so much. They know what their demand is—we don't know that, but whatever information we do have, it's timelier and better communicated than it has been in the past. We try, once we get that information, to adapt our operation to meet the needs of our clients.

JoAnn Martin: Jeff, you're in a very unique position since you get to see across so many sub-verticals within retail: You get to see the grocery sector, the department stores, the retailers and a lot of different avenues of business. How do you see each of those subsections responding to the back half of the year? What kind of conversations are you starting to hear with regards to how they are adjusting their businesses and their flows? Any insight you can provide there?

Jeff Brown: It's interesting since the retail sector is divided into a couple of groups. You've got the food-related group and the grocery-related group, and they are going very strong throughout the rest of the year. The fact is that, obviously, it's been a surge over the last month, but I think it's leveled out a little bit since that time. I'm looking to continue to grow, and we're getting RFPs [requests for proposals] from companies like Kroger to expand our business—as well as Aldi and one other company. So, the grocery business is going to be fine.

When you look at the apparel business, a lot of that business has been impacted: Companies like TJX and Kohl's, which we do a lot of work for, have been shut down now. There was a big push and we're receiving goods right now, but right after the Chinese New Year and only a little bit after, the virus went through China. There’s an incremental push that's hitting the US right now, with goods coming into the ports. That's a good thing, but unfortunately, the apparel guys have canceled a lot of their May and June orders. So, we see retail and apparel being severely impacted. Hopefully it comes back, but that’s what we’re forecasting for the rest of the year.

I don't think any of the apparel guys are feeling too great about the rest of the year. I will tell you this, there is an opportunity right now for the discount guys—like TJX or Burlington—where they are buying up a ton of this excess inventory that is coming in while the big department stores are closed. Will they reopen? Who knows? So, they will be the winners in that outcome. I think staying really close to the off-price retailers, they will be very strong. Five Below is another one that will end up very strong out of this as well.

The other one is the home-improvement guys. We see—and that's like a Lowe's or a Home Depot—that they've been very strong. Maybe that is because people are at home and seeing all the things that are wrong with their houses, but their business seems to be holding up and they have strong plans for the rest of the year.

I hope that gives a little bit more insight for how we see things going.

JoAnn Martin: Fantastic. Thank you.

Deborah Weinswig: To follow up on that question, it sounds like we will see grocers and many of the hard goods in much better shape than the discretionary or nonessentials. In light of that, how does the inventory that is in the stores right now get salvaged, and how does that impact the whole supply chain? Do we see packaway until next spring? I mean, that's got to cause a lot of disruption. Can you help us think that through?

Jeff Brown: That's happening now. We’ve been approached by many clients since they missed the spring season to sell, because their stores were closed and they're looking to either sell that product to a discounter or to basically store it for six months, a year or up to 18 months. They're looking for temporary space out there in the marketplace, and that's a huge winner for industrial. It's not something that—as an industrial real-estate owner—you try to sign one-year deals. You try to sign three-, five- and 10-year deals, but it's in a market where there's a lot of uncertainty. Knowing that there are those types of short-term wins, the marketplace has taken advantage of that in a big way.

Deborah Weinswig: Have you ever seen anything like this before in terms of demand for this temporary space, whether it's for a year, etc, or can you compare it to anything else you've seen in your experience?

Jeff Brown: Yes, somewhat: Back in 2000 with the change of the century and everybody stocking up on water and supplies. That was probably the last time we saw this, and that really never transpired the way we thought. Although everybody was in advance of that in a big way, that's probably the closest that we see on that.

The Impacts of E-Commerce

JoAnn Martin: E-commerce is really booming right now; we're seeing massive growth within that space. How is that redefining the supply chain and how retailers are leveraging resources from you? There is the concept of dark stores and different concepts of deployment. Are you seeing any of that push back into the warehousing and transportation space?

Jeff Brown: Yes, on the e-commerce side, we have had calls from companies, investors, grocery chains. How can we set up dark stores in cities where they don't have grocery stores? They are typically looking at a high-net-worth community in which to start this. We had located a couple locations (through offer) where we can set up warehouses—where we can take in the dry goods as well. We can set up a refrigerated trailer, one for cooling items, one for freezing items, and be able to pick, pack and ship for the local delivery guys.

There are car companies—whether it's Uber, whether it's Lyft—that are able to deliver goods to the local community. Then what's happening is the idea of being able to get the order from the customer and not have to pack it or deliver it within a week, allowing the owner of the inventory to recognize the cash upfront as opposed to get paid a week later when the delivery comes. A lot of people—where cash is king—see this as a huge opportunity to set up this e-commerce delivery cycle: Where deliveries might not have to be same-day, they possibly can be pushed out four or five days. We also see, back at our warehouses, a lot more inventory (in terms of SKUs) that we're being asked to carry for our customers, because they're keeping less inventory in their stores—possibly because of security reasons. Now, people can order online. So, we're seeing a bigger component of SKU product inventory in our warehouses so that people can order more online, direct from the warehouse.

Deborah Weinswig: Jeff, one of the challenges of having more sales pushed online and the inability to try on in store right now is returns. How does this environment handle returns and what are you seeing on your end?

Jeff Brown: Returns have been a big part of our business and certainly a jarring part of this pandemic and a health crisis. People are going to look at that a little differently—about taking the returns back. While that is a business unto itself in supply chain, I think that's going to change dramatically. A lot of companies are looking to no longer accept returns: It is just too risky for them to consider it.

At the same time, there will be a greater focus from the retailers to correctly size orders from an e-commerce perspective—you know, the ability to have more precision on how to really size up somebody—so the amount of returns that have the ability to come back can be limited or reduced significantly.

Live poll: Demand Forecasting in a Changing Landscape

Deborah Weinswig: I can go to our poll results now. So, “In what areas are you investing?” 72% said supply chain technology—much larger than any of the other options. JoAnn, is that what you would have thought?

JoAnn Martin: It is. When you think about the themes that are out there and the inventory—the stranded inventory that we're starting to hear about—supply-chain visibility, to me, is the place where most people are focused. We've been talking about AI [artificial intelligence] and ML [machine learning] from a forecasting standpoint across the industry and retail, and I think people are starting to see use cases where it's directly applicable and adds significant value, as well as shifts from, “Should we move there or when would we move there?” to, “We must move now and figure out how to manage these disruptions more proactively by responding from a forecasting standpoint.”

Deborah Weinswig: Then the second question, which was in regard to your supply chain, was, “Where is your largest pain point?” It’s demand forecasting right now. I mean, Jeff, you said it earlier, right? That retailers don't even know how to plan for the fall, let alone for the holidays.

What are you seeing on the holiday side?

Jeff Brown: The holiday side—it's still kind of early yet—but we think there will be a decent holiday. It might be the first time that people really start to feel a bit more comfortable. We are hoping that instead of a V- or U-shaped recovery, they're thinking possibly of a “W” recovery, where we think there could be a little bit of upscaling for the holiday season since hopefully a lot of people will be back to work by then and in a position to spend some dollars. So, clients, I think, are already looking towards the end of the year and sort of sacrificing the second and third quarters right now. They are basically forecasting the fourth quarter as the first time there might be a surge back for the economy.

Deborah Weinswig: JoAnn, you also see a lot of your clients looking at demand forecasting in a different way than they have before.

JoAnn Martin: We are. When you think about it from a retail perspective, there are two components that they're combating right now:

1. How do I predict demand in the short term to be able to figure out how am I going to come out of Covid, and how should I think about this all-in?
2. With e-commerce growing to the degree it is, how do I manage, not just my deployment to a specific store of a specific product, but my e-commerce business versus my store business?

It is a really unique challenge for them right now.

Deborah Weinswig: Then the last question is around using AI or ML in the supply chain and in forecasting pricing—the majority [from the poll] are not for it. I think this is very challenging. I was at a dinner during NRF [2020] and asked a group of CEOs, “How many of you have an AI strategy?” Every hand went up. “How many of you are implementing that?” One hand went up. I think that just getting the talent and the right tools are really critical.

JoAnn Martin: I think so too. I think one of the things to think about as well is supportive services and managed services. There is a “crawl, walk, run” approach to it too. Building a partner network that helps you support those efforts and continue to drive into that space is really important during this time.

Deborah Weinswig: Jeff, what are you seeing on that side?

Jeff Brown: For AI, we’ve actually been utilizing AI with our non-asset brokerage. So, we have about nine offices around the country where we look to hire trucking companies to move the goods for us. Having the data on which carriers run which lanes and what their pricing is—we have an AI that's telling us which carriers do that and which ones we should be calling rather than to just go and look at every single carrier in a particular market. We look at the ones that typically like to go in certain lanes, and that's been a huge win for us in creating value for our customers at lower pricing and as far as on-time service for them as well.

Deborah Weinswig: Great. You know, I've been surprised during Covid at how important sustainability has been. I think we were all thinking about this differently, but it is so important that the trend has continued. It’s one of the reasons I think retailers are doing packaway as opposed to alternative channels of disposal for their goods.

Jeff, you have always been a true innovator as it relates to sustainability with electric trucks. Can you talk about what your vision is and what you've executed so far?

Jeff Brown: It's actually electric trucks and solar—we've looked at a formula. We have probably 30 drivers in Southern California today that are running an electric truck. They only get 125 miles [around 200km] in between charges, so you really can't send them in very long-haul environments, but we typically are running them back and forth from LA, the Port of Long Beach, back to the warehouses inland.

We are learning what the operating costs are for them and also, what's most important, we really feel that eliminating the greenhouse gases in the air will lower our carbon footprint. Reducing the carbon footprint is a huge opportunity to bring value to the society in which we live today. Being a leading innovator in this area, we hope to have at least 50% of our fleet [as electric] by 2025. Now, with the price of oil where it is right now, that target might instead be 2026 to 2027, but with the idea being that if we can take this experiment of what we're doing in Southern California and march that across the country, we think there should be tremendous opportunities to eliminate the carbon footprint or reduce the carbon footprint on the solar side—especially here in New Jersey where we have multiple warehouse locations.

We are utilizing solar too. I fell back to the energy grid at reduced prices. The idea there is that it's a lower cost to utilize solar and absolutely can reduce energy spending—we think 40–50% versus what the power companies are charging today. We'd like to share that with our clients in our warehouses and reduce the cost.

One of our partner landlords, Prologis, is also doing this around the country. We think New Jersey has got the best incentive package out there today to make the numbers work, and in addition, we’d be reducing the carbon footprint again. So, we're excited about both programs and it gives us a chance to fulfill our vision for how we want to help out the economy and the country overall.

[caption id="attachment_109821" align="aligncenter" width="450"] Jeff Brown discusses NFI’s eco-friendly activities and sustainability targets
Source: Coresight Research[/caption]  

JoAnn Martin: Jeff, with the changing landscape that you see in retail and countries closing and opening at different rates with different support from governments, what countries do you see poised to be able to help out post Covid and have the most advantageous potential for retailers, whether it be from a buying or sourcing standpoint?

Jeff Brown: Today, China is a big player in sourcing goods for the US, and they will continue to be a player, but I do think all these companies that are in the US—the largest economy in the world—are going to look to get their goods closer to home. Whether that means Mexico, whether that means Canada, whether that means here in the US itself, we feel that those countries will have an opportunity to expand their business dramatically by serving the US customer base.

Deborah Weinswig: One of the challenges that we've heard in terms of onshoring or nearshoring is just the talent. How do you think about that, and do you think it's six, 12, 18 months in terms of getting people re-skilled from a US perspective?

Jeff Brown: Deborah, I think right now, because of the amount of unemployment and the unstable economy out there, there will be a lot of talent available that is willing to go to work and put the effort in to learn whatever skill set is necessary to bring value to themselves and their families in this new world. That is just one silver lining that we see as a company—that we can improve the talent out there dramatically because a lot more people are going to become available, because unfortunately, a lot of companies are not going to be doing all that great. People are going to want to leave. We look at that as a silver lining to improve the overall talent within our organization.

Q&A: Data Transparency across the Supply Chain

Deborah Weinswig: Great. JoAnn's going to kick off our a more formal Q&A session.

JoAnn Martin: Absolutely. The first question, Jeff, is, “Do you see department stores building as candidates for conversion to logistics centers, especially in the last mile? How do you see the transformation within department stores and their focus in the future?”

Jeff Brown: I think that's happening already. For companies like Walmart and Target, we're shipping a lot from our warehouses to the stores. From the stores, these are all e-commerce orders that were called in or done through e-commerce, and they pick up the goods at the stores or they are delivered from the store. So, our DC to store business has picked up dramatically for Target and Walmart because of e-commerce, though not necessarily seeing same-store sales gains year over year. It's the growth because they are now e-commerce as well. I continue to see that as an opportunity for certainly the bigger players out there. It depends on the size of the store—how much you can really afford to keep as inventory in that store in addition to what you're selling as a store versus what you're warehousing as an e-commerce delivery company. But that will always be an opportunity to explore, and I see that as a growth engine in today's world.

Deborah Weinswig: Great. The next question is, “Do you see your clients as likely to keep more inventory on hand going forward once the economy recovers to absorb future supply chain shocks?”

Jeff Brown: As I mentioned earlier, I do believe companies will have more SKUs to support, not necessarily the stores, but to support e-commerce in a much bigger way. The stores will be probably just be a showroom for people to look at, and maybe they’ll start to have a kiosk right there where people can order from the store exactly what they want and then have it come straight from the warehouses.

So, we see inventory absolutely increasing, and as a matter of fact, with JLL and CBRE (commercial realtors), because of our warehousing involvement with them, we join monthly calls with them as to who is looking for industrial space around the country—they call it “Tenants in the Market.” On every one of these calls—for every single market that we look into around the country—Amazon must be 30% of the opportunity when it comes to looking for warehouse space in the marketplace. After Amazon, it's Walmart. So, they're all looking to expand their industrial footprint to really accommodate the growth of e-commerce.

JoAnn Martin: Thanks. One of the next questions really tagged the theme you mentioned, the fluctuation of demand that we are seeing throughout the industry: “Are you also seeing an increased push for data transparency across the supply chain?”

Jeff Brown: Oh, absolutely. Data transparency allows one to manage workforce demand much better, and absolutely it is what’s needed for this country to run more efficiently. The more open clients are and vendors are, the better we all will be, and there will be something there for everybody to make money on: Share your deck, because sharing data allows everybody to end up a winner. It’s much easier that way.

JoAnn Martin: Yes, we're definitely seeing the theme to break down those silos a little bit and to have that transparency, have that commonality of data across, and be able to drive that collaboration.

Jeff Brown: For sure.

Deborah Weinswig: Just a few more questions, Jeff. “We are specialized in new retail and e-commerce in Asia: How do you think NFI can collaborate with us in this new kind of normal for retailers in the supply chain?”

Jeff Brown: Well, we could talk right after the call. We'd love to do that. We have a whole team of engineers that we could work with your team. You know, we might not be the right solution, but we certainly will be able to recommend a solution. Being overseas, we may or may not be the right solution there, but we have a lot of contacts over there; we could probably put you with the right people, if it's not us.

Deborah Weinswig: Great. JoAnn, you want to take us home with one last question?

JoAnn Martin: Absolutely. The question is, “Do you foresee a reduction in number of SKUs towards narrower and deeper assortments to inventory? Do you see that contraction of choices and the expansion of depth?”

Jeff Brown: As I mentioned earlier with e-commerce, I think it is going to be just the opposite.

I think there will be more SKUs. More inventory required in the workplace, in the warehouses going forward, because when I get a sale, every time someone goes on the e-commerce website for that company, you’ve got to carry everything and you have to do it regionally to  get there in a timely fashion as well.

I will tell you this, I do think e-commerce in the food, in the cold cooler and freezer business is going to be huge. It's been happening over the last seven weeks in a big way. It's probably gone up 3,000%, 4,000% in sales. It might come down once the country opens up, but it won't come down back to where it was. Instead of 3,000% or 4,000%, it's still going to increase at least a 1,000%, because people love the format; they love the program. People are used to eating at home again, and we think that's going to be a huge play going forward.

Deborah Weinswig: To that question, what we are seeing is that to stay in stock, grocers are optimizing their assortment to make sure that they help build confidence for their consumers. There aren't these gaping holes in their assortment. We are seeing that now, but I think that's a temporary phenomenon.

JoAnn, I'm going to actually ask you the last question. “What are some of the leading retailers doing in terms of planning collaboration with their supply partners during this period?” What are they collaborating on, and what information are they sharing—forecasts, projections of future orders, etc?

JoAnn Martin: What we're seeing is that a lot of retailers start to collaborate within their space. We're trying to connect customers that have common problems so that they can start to brainstorm together as well. We’re saying that openness and transparency with people within the same sectors is something that we're trying to foster from a supply chain partner, although I think that there are a couple of things that are happening.

The first thing—they're looking for cash. So, they're looking to see where they can save their cash and whether they should be delaying orders or postponing orders, but they're also looking to technology partners like us to be able to help manage during these times where their workforce may not be optimized or they may not have the skill sets that we talked about.

So, they’re really looking to lean on people that can help support some of these advanced technologies and forecasting and supply-chain visibility as we bring their teams along and they start to bring it in-house or automate it to a finer degree.

Deborah Weinswig: Great. Well, with that, I want to thank JoAnn, my cohost, and Jeff, our special guest. This was fantastic, and I’m looking forward to our next conversation.

Jeff Brown: Absolutely. Thank you.

JoAnn Martin: Thanks so much.

[caption id="attachment_109822" align="aligncenter" width="450"] Deborah Weinswig co-hosts the Open for Business webinar series
Source: Coresight Research[/caption]