Source Report Highlights the Challenges of Supply Chain Change for Retailers
Sarah Jones
5 min read
Whether it is sourcing or sustainability, a newly released survey report from trade show brand Source shows that for retailers, the pull of the status quo is currently stronger than the push for change.
Source, which encompasses the events Source Fashion, Source Home & Gift and Source Garden, surveyed roughly 200 U.K.-based retailers for its report, coauthored by consultancy Insider Trends. During a webinar centered on the report, Jack Stratten, head of trends at Insider Trends, said the survey findings indicate that change seems to be harder for bigger companies, whether it is the sourcing map or sustainability. “Supply chains are these big legacy beasts that are incredibly hard to change,” he said.
Suzanne Ellingham, sourcing director at Hyve Group, the company behind Source, noted that a key finding was the discrepancy between what both companies and consumers are saying versus doing, including when it comes to sustainability. “What we were hearing from our advisory board, from our customers, from a lot of the partners that we work with, is that sustainability, strangely, is just moving down the priority list. And that, to us, was a little bit concerning, because I think we’re all very aware that we’re on a countdown at the moment to try and move things into a more sustainable way,” she said. “And the reality is, the sourcing and how you make your products, how you transport them, has such a huge impact on sustainability; they’re so intrinsically linked.”
Seventy-eight percent of the retailers reported advancing in sustainability compared to 12 months ago, and this jumps to 88 percent among larger companies with more than 50 employees. Among those who made progress, companies are most apt to attribute this to having ESG as part of their core values, followed by authentic leadership and support from the top of the company. The respondents who said their companies didn’t progress attributed it most often to a lack of consumer pressure on sustainability, cited by 52 percent. The second most common reason was the sheer size and cost of the task of transforming the business, which about four in 10 indicated as a hurdle.
Looking ahead to 2025, 54 percent say they are increasing sustainability funding, with larger firms more likely to raise funds—64.5 percent said they would increase budgets. For the 46 percent who are not raising investments, large and small companies are split on the main reasons. Bigger firms most commonly say it is not a priority or there are competing priorities. Meanwhile, smaller companies’ top reason is that they feel they are currently investing enough to make a difference, causing them to stay the course.
For years, the discussion around sourcing maps has been focused on diversification, but the survey showed that some key destinations remain in the lead. For the U.K. retailers, China was the most popular international sourcing destination, with close to half (49 percent) sourcing from there. Internationally, India and Western Europe were the next most popular global sourcing locations, selected by a respective 37 percent and 33 percent.
Onshoring is also prevalent, with 42 percent sourcing from the U.K. About a quarter of respondents (26 percent) solely source domestically, and 70 percent of this group doesn’t plan to change this within the next year and a half. The main reason for staying put was being happy with the current sourcing region, chosen by 42 percent of respondents. Large businesses were most likely to cite concerns about a lack of knowledge or networks in other regions, mentioned by about half of big firms.
Large retailers are most apt to be swayed to source from a new region to court newness or a new product category (35 percent), followed by 32 percent that want to derisk their sourcing operations. Meanwhile small businesses seek out new regions most for reduced costs (52 percent) and newness (41 percent). “When we threw [that question] out there, I expected price to be leading the way by a country mile,” said Ellingham. “The reality is that it’s still quality and innovation within products that is guiding whether or not somebody changes the sourcing region or whether they start investigating into a region.”
Cost, however, remains a key concern for both sustainability and sourcing. Stratten noted the need to empower employees to make decisions that are right for sustainability but might not be the absolute most cost-effective. Ellingham questioned whether the tendency to focus on margin and getting the lowest price for goods is “short sighted,” given the money spent on merchandise that does not sell or even reach the sales floor. Contrary to the view that U.K. or European sourcing is always more expensive, she noted it has the potential to support better margins due to benefits like shortened lead times.
“If we just eliminate, or at least lower the overproduction, we are in better shape,” said Linda Pimmeshofer, retail advisor and board member at Pricer, noting the role of technology like product lifecycle management in helping to curb waste. She added, “Sustainability is also a question of efficiency and doing more with less and waste nothing, and that is a data story.”
Source’s report also stresses collaboration’s role in driving sustainability. This includes sharing knowledge cross-industry to avoid duplicated efforts and trials, as well as being open about challenges. Although regulations may usher in more urgency for sustainable action, the laws rolling out around transparent claims could lead to companies clamming up about their initiatives to avoid potential greenwashing penalties.
“There’s a huge lack of collaboration in the industry, because people aren’t talking about their honest journeys—about where things are going well, where things are not going well,” said Ellingham. “Until we become very open about where things are going right and where things are going wrong, how can we collaborate to fix some of these issues?”
