Festive Consumers Will Drive Holiday Spending
The peak season 2023 holiday shopping season is just around the corner. And one thing is certain: Consumers are ready to spend. And spend. And spend.
The festive late fall and early winter seasons always increase that holiday spirit. Combine that with pent-up demand from last year, and consumer spending will surge.
This is not just my assumption. Long-term consumer behavior data back this expectation.
Just like this year, 2022 brought an onslaught of predictions that consumers would spend less. Instead, from October-December 2022, sales soared 8.3% compared to 2021. Forbes reported that nonstore sales, including eCommerce, were up 9.3%. And some categories (sporting goods, musical instruments, bookstores) were up 20%.
Early access sales in September and October have pushed some holiday shoppers to buy early. Peak holiday spending is no longer just Black Friday and Cyber Monday.
Still, the holiday season has always been a time for indulgence. This year will be no different. Insightful leaders need to prepare their retail, eCommerce and fulfillment operations.
Warehousing seems to be in place. However, most companies are not prepared when it comes to logistics labor and transportation solutions.
Warehouses: Ready and Waiting
My research shows that companies are well-prepared when it comes to warehousing. Over the past year, many enterprises have accumulated inventory. This, of course, means they are importing less.
The goods are there. So is the warehousing space. But that is not nearly enough, as warehousing is only part of the equation. Your enterprise needs the ability to move those goods efficiently to meet consumer demand.
The Challenge: Labor and Transportation
While warehousing is under control, two crucial elements of the supply chain might pose significant challenges: labor and transportation. When peak hits and customers start ordering, companies might find themselves short on people and transportation options.
The labor market has been unpredictable, with many industries facing worker shortages. For the logistics industry, recruiting and keeping qualified workers remains a huge problem.
On the other hand, transportation has its own set of challenges. With increasing fuel prices and logistical complexities, securing reliable transportation can be a daunting task.
Locking in on one transportation solution could prove fatal. A solid transportation diagnostic evaluation (TDE) can identify the right fit for truckload/less than truckload, multimode, final mile, even freight forwarding.
Better yet, combining those TDE results with a solid Transportation Management System (TMS) can take your transportation bench eight or nine deep. That optionality is a competitive advantage when your competition – and you – are scrambling to meet spikes in demand.
Giants Gearing Up: Amazon and DHL
On the labor front, supply chain leadership at industry giants are recognizing and addressing their personnel challenges. Amazon and DHL want to avoid holiday shipping delays caused by a lack of logistics labor.
Amazon plans to hire an additional 7,600 workers in Nashville and a quarter-million employees across the U.S.
Similarly, DHL eCommerce just opened a consolidated distribution center near Cincinnati/Northern Kentucky International Airport. The $74 million facility has the technology to process 50,000 parcels and packages an hour. It can also unload 20 trucks an hour, sorting and reloading for final mile delivery.
Overall, DHL has invested $400 million in U.S. operations to make sure it has the technology, labor and transportation necessary. DHL will not be running out of trucks.
These moves by Amazon and DHL highlight the importance of proactive planning. By securing labor, transportation and distribution resources ahead of time, these companies are positioning themselves to manage the holiday surge effectively.
Your Move: Secure Flexible Solutions Now
Before the crunch hits, it’s crucial for companies to secure flexible labor solutions and transportation options.
Most players in this space cannot hire a quarter-million workers in the next few months. Nor can you open multimillion-dollar distribution facilities.
However, you can secure flexible labor. Task4Pros offers trained, flexible warehouse labor in many U.S. locations. The company seems to expand to new locations each week. Your labor operations can easily scale up and down as needed.
Unlike many temp agencies, their Pros arrive prepared for warehouse work. The company has a 100% fill rate and turnover less than half the industry average.
As mentioned above, pairing a TDE with a TMS is a good option at any stage of the game.
These options can be particularly useful during peak seasons to handle demand spikes.
And yes, those holiday sales spikes and supply chain issues are coming.
Don’t Wait for the Peak to Hit
September is already late in the game when preparing for peak season 2023. Supply chain leaders should not wait any longer.
Avoid shipping delays and poor customer service by securing flexible labor and transportation options now. Let Tompkins Ventures help you turn the challenges of the holiday season into opportunities for growth.
Jim Tompkins, Chairman of Tompkins Ventures, is an international authority on designing and implementing end-to-end supply chains. Over five decades, he has designed countless industrial facilities and supply chain solutions, enhancing the growth of numerous companies. He previously built Tompkins International from a backyard startup into an international consulting and implementation firm. Jim earned his B.S., M.S. and Ph.D. in Industrial Engineering from Purdue University.