Last year the peak shopping season was dominated by record-breaking online volumes and this year we’re expecting one that’s just as chaotic. Ecommerce volumes will continue to rise, with the traditional peak shopping season set to open with an October that according to data in Metapack’s Peak Delivery Trends 2021 report is set to be up almost 20% from the same time last year.
With driver shortages, the fight for labor in warehouses and supply chain issues showing no signs of disappearing, we’re expecting this to have a major impact on the holidays, especially as consumers ramp up their spending. What we’re seeing is that consumers are likely to find shortages on high street shelves more and more and will consequently turn to online shopping to plug the gap. But will retailers be able to meet this demand?
Supply chain chaos
It’s no secret that supply chains are toiling. Retailers are struggling to get products on shelves and keep up consumer demand. We have a situation now where not only are retailers competing for sales but also competing for cargo space and in-demand products.
Specifically, anything that comes from China is at risk, due to the global cargo shipping crunch combined with the shortage in the microchips that are used in the toy industry. Also, there are signs of a global shortage of electronic components such as motherboards, CPU’s, graphics cards etc., which will negatively impact on the supply chain of electronic toys this Christmas. This has largely been driven by global demand for work from home, to educate at home and cryptocurrency mining.
Alongside this, we’re seeing shortages in food, decorations, and bigger furniture items, such as tables and televisions that consumers tend to buy ahead of the family gatherings and festivities we normally associate with Christmas.
The battle for labor
The bottom line is that there simply isn’t enough staff to keep up with demand, both online and offline. A consequence of factors such as Covid and Brexit, retailers such as Next have already warned about staff shortages in warehouses and logistics as they struggle to meet demand. The battle for labor between retailers is underway in fulfilment hotspots, with companies such as Amazon offering signing-on bonuses and others offering to pay staff significantly higher wages than previous years. As wages along with shipping costs rise, consumers will see an increase in prices, especially for the most sought-after products.
BBC Video
Bruce Fair, CRO at Metapack discusses the labor shortages and Peak 2021
Last mile delivery shortages
The other huge challenge for retailers and carriers is whether they have the capacity to make last mile deliveries to consumers. Driver shortage is one area where we’ve seen retailers and carriers struggle. Last peak, driven by the pandemic, online deliveries volumes increased by 70%, but there were more delivery drivers available to help ease the demand. This year, with volumes set to increase by almost another 20%, and with less drivers seemingly available, there is serious concerns in the industry and whether retailers will actually be able to deliver this Christmas. With delivery wages set to increase, and some carriers looking to add surcharges help ease the demand, its consumers, who on top of rising products costs, might have to brace themselves for an increase in delivery costs as well.
From building contingency into carrier supply chains, to decreasing delivery options available and encouraging consumers to shop earlier, there are ways that retailers can successfully deliver this Christmas, they just need to be prepared to fight on multiple fronts.