The 2020 Holiday Season Is Unlike Any Other: UnprecedentedDecember 1, 2020
It goes without saying that this holiday season will be described with the same adjective that applied to the rest of 2020: unprecedented. Traffic at stores on Black Friday fell 52.1% compared to last year, according to Sensormatic Solutions, and online spending surged 21.6% to hit a new record, according to Adobe Analytics. Throughout this entire year, supply chains have been packed up, inventory has not followed annual spending patterns and retailers are continually being forced to adapt, and then adapt again. So, with less than one month until the holidays, how are retailers navigating this critical, yet complicated season?
Shopper Behavior During the 2020 Holiday
According to Deloitte insights, 51% of shoppers are feeling anxious about returning to stores and 33% of shoppers are in a worse final position than last year. As a result, 40% of shoppers are expecting to spend less money this holiday season than the last. For retailers, this further solidifies that price, product and convenience are the most important considerations for shoppers and the ability to deliver in these areas will be make or break.
The forecasted shift in shopping patterns was truly exemplified during Black Friday this year. In-store shopping was down, but this does not mean consumers aren’t shopping though, the sales simply shifted online. Even much of the in-store traffic was attributed to online sales as in-store and curbside pickup rose 52%. In addition, as predicted, Cyber Monday broke the record for the largest online shopping day in US history. The data from these all-important shopping days appears promising for retailers looking to finish 2020 on a high note.
Fulfillment Concerns Through the Holiday
With the increase in online sales comes difficulties matching new fulfillment expectations. Overall online sales are predicted to be 33% higher than last year, which Adobe Analytics points out is “equal to two years’ worth of holiday e-commerce sales growth shoved into one season.” Delivery orders are expected to experience serious capacity bottlenecks as senders, recipients and shippers adapt to new trends. Consequently, supply chain experts are recommending that consumers order all Christmas presents at least a week before Christmas, as opposed to 3-4 days before in previous years, regardless of expedited shipping guarantees from retailers to hopefully ensure on-time delivery.
It takes years to save, plan and allocate the resources needed to increase capacity for delivery services. Potential solutions to the “shipocalypse” include limiting the number of items retailers can sell in a day and increasing shipping prices to encourage shoppers to try buy-online-pick-up-in-store methods, neither of which are ideal for retailers or customers. Digital supply chain innovations, however, can adapt to consumer needs and provide fulfillment solutions that work.
Inventory Management Concerns This Year
Unlike with the initial shock of COVID-19, inventory managers were able to predict a change in buying habits going into the holiday season and make adjustments. Mark Burstein explained that, “there is less holiday inventory across the board as no retailer has purchased near the amount of product that they would carry during a normal holiday season. So, they are allocating inventory more precisely across their store locations based on climate.”
With concerns of the latest COVID infection spike, “all stores are carrying less-than-optimal inventory compared to a normal holiday season. By now, most retailers have an e-commerce channel, so inventory is currently being held in fulfillment centers to serve online orders. As the stores run low on inventory, the retailers will transfer product from the fulfillment centers to the stores. But retailers are not willing to overstock the stores in case COVID causes them to go unexpectedly dark again. But overall, the inventory allocation, deployment and management lessons learned during the pandemic will become the ‘future normal’ standard operating procedure for retailers well beyond the end of the COVID.”
Resilient Retailers During This Unprecedented Season
Despite the uncertainty going into this holiday season, retailers will surely find a way to adapt and head into 2021 with new innovations to match the new challenges. However, one thing is for sure, flexibility will be essential. With NGC’s cloud-based digital supply chain platform, making in-the-moment adjustments is simple, efficient and cost-effective. Contact us today to learn more.