Every year the logistic industry works tirelessly to meet the demands of the holiday season and normally one would say this year is no different, expect that this year it is. With years of data to study analysts have been able to accurately project the revenue thus allowing the industry to prepare for what lies ahead. Last year the National Retail Federation forecasted about 729 billion and the actual numbers came in around 730 billion. This year’s projection is a 1-2% increase for those numbers but a myriad of factors makes last year’s accuracy improbable. The logistics of logistics in the holiday season is always a balancing act, but this year there are additional factors and challenges.
Supply Chain Interruptions
Prior to covid there were households across America that had never heard the words “supply chain”. We went from a golden age of immediate access to all our hearts desire to fist fights over toilet paper. Panic buying and a dramatic increase to online shopping increased the demand upon the logistics industry tremendously. Although the industry stepped up in a major way the challenges were significant, and we are still seeing hurdles. While there is still some debate over the election, most have resolved that Biden will be the next President. Although Biden has stated that he will not shut the country down, many people believe that he will (some areas like Pennsylvania are voluntarily upping their restrictions now), and the panic buying is starting to set in. Most retailers already have their holiday orders in route or on shelves, however when it comes time to restock mid-December the focus may have to be on essentials rather than trinkets. Retailers attribute 20% to 30% of their annual sales to the holiday season, they will certainly want those items on the shelves.
The Online Shift
The trend over the years has been shifting to online shopping, but the holiday season was still seeing high numbers of brick and mortar shoppers. Deloitte predicts that holiday e-commerce sales will skyrocket up to 35% compared to a 14% increase last year. A portion of the shift is the entertainment and restaurant factor. In 2019 12% of holiday budgets went to dining, sport events and restaurants. $450 billion in revenue that is now considered risky behavior, many consumers will be ordering online items instead this year. Coresight conducted a poll and 7 out of 10 responders stated that they would be shifting their spending because of Covid-19 restrictions. This influx of orders is bound to bottleneck the supply chain. Shoppers may have gotten away with last minute orders in Christmas past but that is impossible in these new times. Last year two days before was a reality and now shipping cuts-offs are likely perhaps as early as Dec. 15th.
Last Mile Relief
The last mile in logistics is a potential nightmare when it comes to bottleneck issues. The only relief insight is the push from big box retailers for consumers to buy online and pick up in the store. The BOPUS angle has benefited those big boxers significantly during the Pandemic and they expect the trend to flourish this holiday season. Target plans to spend an extra $50 million over the holiday season training and staffing the pick-up department. CEO Brian Cornell spoke on a Q2 earnings call about the success the company has had with this program, “In our digital channels, we continue to see the most rapid growth in our same-day fulfillment options, in-store pickup, Drive-Up and Shipt, which together have more than doubled their sales in the last year,” Cornell said. “These options offer speed, convenience and reliability, and as a result, they are quickly becoming the preferred fulfillment choices for our guests.”
This year is up in the air because there is no prior data on a year like 2020. Retailers have already taken a harsh hit this year and many did not survive the crash, this is a make or break it moment for many out there. Without data there is no telling what this year will bring so instead let us just prepare for the miracles that the logistics community can create. There is no doubt that without the tireless work of the logistic community though this pandemic all lives would have been lost. (THANK YOU FOR YOUR SERVICE LOGISTICS PERSONELL YOU ARE ESSENTIAL). Also thank you in advance for the work that you are doing now and will continue to do this holiday season!