Retail Supply Chains at Risk from Geopolitical Turbulence

Global consultancy Proxima sets out how geopolitical conflict places retail supply chains under pressure.

Its analysis points to higher costs, longer lead times and mounting instability and stresses that procurement leaders need to take a fresh approach to sourcing and logistics if they want to withstand disruption.

To build its analysis, Proxima draws on millions of data points, ranging from spend data and carbon footprints to commercial analyses in order to give the most appropriate solutions.

How Proxima maps global risk

Proxima, a procurement and supply chain consultancy founded in 1994 and now part of Bain & Company, works with multinational businesses to cut costs and improve procurement processes.

The firm focuses on cost optimisation, organisational change, supply chain sustainability and decarbonisation and combines this expertise with Bain to deliver end-to-end procurement and supply chain solutions.

To build its analysis, Proxima draws on millions of data points, ranging from spend data and carbon footprints to commercial analyses.

Its Global Sourcing Risk Index, created in partnership with Oxford Economics, assesses the top 20 global economies and 10 fast-emerging ones against eight risk dimensions and 10 sectors.

The Index finds that geopolitical conflict is one of the most destabilising factors for retailers.

According to the Global Peace Index, 2024 marks the fourth year in a row in which peacefulness declines, with militarisation identified as a central factor.

Alongside this, tariffs, the continuing war in Ukraine, the Israel-Hamas conflict, the rise of artificial intelligence and cybersecurity threats and extreme weather linked to climate change all disrupt trade and supply chains.

Proxima says: "Making change happen is more important than ever but also harder than ever. Whether it’s geopolitical disruptions, economic pressures, the imperative to drive to net zero or even just survival, businesses are grappling with major challenges and want to solve them fast."

Where retail supply chains face exposure

Proxima’s analysis singles out Mexico, Turkey and Russia as the riskiest sourcing markets for retailers, pointing to legal, operational and reputational challenges.

• Mexico is deeply integrated into supply chains serving both the EU and US, but this leaves it exposed to cargo theft and tightening border security.
• Turkey sits at the intersection of East and West, giving it strong trade links but also leaving it vulnerable to price instability, political tensions and reputational risk.
• Russia faces the heaviest challenges due to sanctions and the ongoing conflict in Ukraine, with legal barriers and operational blocks pushing retailers to exit its markets.

These risks are layered on top of wider global pressures. Rising war-risk premiums in logistics and insurance, diversions of shipping routes in the Red Sea and growing demands for retailers to hold more stock in advance all add cost and complexity.

Textiles, footwear and other consumer products sourced heavily from China, Turkey and India leave retailers exposed to sudden disruption if access to these markets is curtailed.

Simon Geale, EVP at Proxima, says: "Retail supply chains are being stress tested by overlapping geopolitical, operational and regulatory forces.

"Procurement leaders now need to balance cost, resilience and speed in every decision and that means taking a portfolio approach to sourcing, logistics and supplier relationships.

"By combining diversified sourcing with flexible transportation strategies and better use of data, procurement teams can make faster, evidence-led choices that protect margin, service and brand reputation, even as external volatility persists."

Building resilience into the supply chain

Retailers are now focusing on resilience as a core part of procurement and supply chains.

Multi-sourcing and regionalisation are increasingly popular, with businesses choosing to spread sourcing across several countries or regions instead of depending on a single hub.

This reduces exposure to sudden disruptions in one location.

Digitalisation also helps procurement teams manage risk, as by using advanced data systems, retailers can monitor supplier compliance, improve traceability and keep tighter control over inventories.

This creates visibility across supply chains and strengthens the ability to act quickly when disruptions occur.

Transport strategy is another area of focus. By mixing freight modes such as air and ocean shipping, retailers can adjust lead times to cope with disruption and keep customers supplied.

Real-time monitoring allows teams to manage delays as they happen, protecting service levels and keeping logistics costs under control.

Although geopolitical conflict adds heavy risk to retail supply chains, retailers have a range of tools to adapt.

Through diversifying supply chains, digitising operations and blending transport options, they can cut exposure and keep supply moving.

Proxima’s analysis makes clear that in a world of overlapping risks, supply chain resilience is no longer optional but an essential part of retail strategy.