Ask the average person when the holiday season starts, and they’ll probably answer, “Black Friday!” Ask any logistics professional, especially those embedded in a major retail chain’s operations department, and their answer will be much sooner. In fact, the holiday surge can start anywhere from January to March.
During any given year, the global supply chain meets its maximum stress point somewhere in the lead up to the holiday shopping season. But in a world still coming to terms with post-COVID commerce, that supply chain is susceptible. You might even call it “Rickety.”
As the saying goes, “The early bird gets the worm.” This year, retailers are faced with a narrow window to prepare for the holiday surge. The bad news? The window is now. The good news? It’s not too late to plot out your logistical strategy.
Current Economic Conditions Will Set the Tone
2020 was one of the most contentious holiday shopping seasons in modern history. A perfect storm of economic, socio-political, and public safety factors converged to rewrite retail’s peak season playbook.
During the 2020 season, the traditional brick-and-mortar experience —already amid a long decline— eroded before our very eyes. E-commerce drove purchasing volume throughout the 2020 season. This year’s forecast is optimistic, however. Some sources expect retail sales to gain more than 2.7%, growing to a massive 1.093 trillion dollar industry. Likewise, e-commerce is expected to appreciate more than 11% to total $207 billion in revenue.
Despite healthy metrics, the industry still faces a number of lingering challenges this Fall. The global supply chain is still fractured as a result of COVID-19. Factories that shut down last Spring are having trouble getting back up to full operational speed. The current state that the global shipping industry finds itself in is another issue. There is an alarming lack of containers and multiple shipyard bottlenecks, especially in Southeast Asia.
The labor shortage is another contentious issue, one whose effects will still be felt during the peak of the holiday season. As it stands, the labor shortage:
Will likely get worse as the economy resets
Has a snowball effect on all other supply chain challenges
Couple that with the problem of in-person shopping, which is still situational at best, and the 2021 holiday surge is already shaping up to be its own unique animal. The best weapon in the logistics professional’s arsenal? Preparedness. Leveraging competent (and innovative) partners like freight forwarders, 3PLs, and drayage providers will give you a competitive advantage as opposed to navigating 2021’s logistical complexity on your own.
Risk Vs. Reward: Preparing for 2021
To put it bluntly, the company with the inventory stands to conquer the 2021 shopping rush. Last year, we saw companies successfully read the direction that the wind was blowing and anticipate consumer demand. While never an easy trick to pull off, those who bolstered their supply chain early, with their focus specifically on shipping, warehousing, and general procurement, managed to salvage their holiday revenue results. To pull it off, the companies in question had to start insulating their operations as early as June. While this strategy has a certain amount of benefit built into it, it’s not without its own risks.
Investing early ties up the company’s cash assets, limiting their agility through the leaner summer season. It also creates a back stock of dead product; you can’t sell holiday items yet, and therefore can’t realize any revenue from them.
Getting ahead of the curve is a calculated risk. Those who cannot successfully navigate these dire straits may lose shelf space, warehouse real estate, money, and, most importantly, consumer confidence. The problem then becomes fostering preparedness in such chaotic market conditions.
Strategies for Meeting This Year’s Holiday Surge Demand
Desperate times call for desperate measures. Conditions over the last year have been especially hard on home improvement stores like Home Depot. To counteract their supply chain woes —and meet surging customer demand— they took matters into their own hands and purchased their very own freight transport ship. While that might seem like a drastic measure only available to a billion-dollar corporation, there may be some wisdom to thinking outside the box. Creative problem-solving is in fact, the necessary approach to take before the 2021 prep window closes this summer. Here are a handful of our favorite strategies designed to give you an adequate starting point.
Negotiating Expanded Terms with Vendors
Retailers, buyers, and logistics professionals must remember that we are a part of a global supply chain that’s bigger than all of us. A tried-and-true strategy is thoroughly evaluating each link in the chain with an eye for optimization.
Now is the time to speak with your vendors and manufacturers, solidifying professional relationships and re-negotiating terms as necessary. When each rung on the ladder is dependent on the rung that comes before it, it pays to make sure each one can support your weight.
Stocking Inventory with an Added Shelf Life
This can be a difficult strategy to pull off, but the results are well worth it. In the summer leading up to the 2021 holiday season, retailers should look to stock products with extended shelf life. Extended shelf life, in turn, means a more universal level of value which translates to reliable revenue. The difficulty comes in balancing these types of products with seasonal holiday trends.
While some big-name corporations are able to drive those holiday trends based on the power of their marketing spend, not every retailer has that level of control over the national zeitgeist. Your task here is to find the balance point between hot sellers and universal demand. Spending prep time to procure agile inventory will pay dividends going forward.
Proactively Adjusting Warehouse and Cargo Space
Two of the most important logistical elements in your supply chain are cargo space and warehouse space. You have to be able to get your holiday inventory and store your holiday inventory. Securing adequate logistical infrastructure is priority number one.
One of the best strategies you can employ is negotiating contracts that guarantee space in either category well ahead of time so that you aren’t left in the lurch come crunch time.
Finding Alternate Supply Lines
When all else fails, make sure to develop a contingency plan. Set aside a portion of this summer’s prep window to fleshing out alternative supply chains. Look for local alternatives that can help you satisfy demand while regulating transport costs. Building new business relationships can only benefit your company in the long run.
Getting Ahead of the Holiday Curve
We are living through an unprecedented time in the world of professional logistics. While we can make an educated guess as to what the 2021 holiday surge has in store, there’s no way of knowing for sure. The best strategy is to prepare well in advance, which means starting your holiday prep now.
Symbia Logistics can help with your logistical concerns this holiday season. For more information on our services, or to learn about the latest industry trends, please contact Symbia Logistics today!