‘Tis the season to be worried about retail logistics!
This year, as many retailers prepare for their busiest weeks, uncertainty abounds. Consumer demands are shifting more rapidly than ever, e-commerce continues to disrupt brick-and-mortar retail in unexpected ways, new pressures are being put on fulfillment, and the trade war with China looms over every sales projection.
For retailers, the anxiety is justified. In 2018, holiday sales fell way short of expectations, and there are other factors at play this year which could make the situation even worse.
However, there are also plenty of reasons for retailers to be optimistic about Q4 2019. Let’s take a look at the most important factors that will impact retail sales and logistics during the holidays.
A short season creates high pressure
Politics and market shifts will always be unpredictable, but there’s one-factor driving uncertainty this year that all retailers could have seen coming — the calendar.
Thanksgiving falls on November 28th in 2019, which means the official holiday shopping season (Thanksgiving to Christmas) is technically six days shorter than it was last year.
Losing nearly a week of holiday sales isn’t necessarily bad for business. After all, consumers still want to buy the things they want to buy, even if they have to do it faster. However, it does create new logistics challenges.
With a short holiday season, retailers have less margin for error when it comes to all things logistics, from marketing to fulfillment. Direct mail campaigns, inventory shipments, and deliveries all have to go off without a hitch. Late shipments and backorders won’t fly in 2019, especially as on-time delivery plays a bigger role in determining the customer experience.
Speaking of the customer experience…
Consumers are demanding fast shipping
What does a holiday shopper want? If you answered “great deals,” you’re right. Cost remains the number one factor affecting retail decision making during the holidays.
However, the number two factor is gaining steam. Twice as many consumers listed “speed” as a key concern in 2019 than in 2018.
Why? This growth is probably due in part to new expectations set by companies like Amazon, who offer one-day or even same-day delivery in some markets. Speed concerns are also heightened during the holidays, when items are more likely to be purchased as gifts, and therefore more likely to be needed by a certain time.
These numbers come from a consumer expectation survey from Convey, which includes a lot of other interesting insights:
- 64.3% of consumers pointed to cost as their most important holiday shopping objective.
- 18.7% said speed, twice as many as last year.
- 79.3% of consumers said they thought free 2-day shipping was important.
- 30.8% of consumers said the in-store pickup was important.
- 72.7% of consumers said they’re unlikely to purchase from a brand again after experiencing a poor delivery experience.
That last statistic, combined with the short holiday season, spells bad news for retailers that don’t have their holiday logistics locked down.
You’d better not pout
Despite all of the uncertainty about tariffs and the economy, optimism still reigns for retailers in 2019.
Experts are predicting a strong holiday shopping season. Looking at reports from the National Retail Foundation, Deloitte, and AlixPartners, it looks like forecasters are predicting the growth of anywhere from 3.8%-5.3% over last year’s numbers.
However, these predictions should be taken with a grain of salt. Remember, last year’s numbers fell way short of expert forecasts, and there’s nothing to say that won’t happen again.