The biggest shopping day in the world - China Singles Day, a 24-hour shopping marathon boasting big sales - was recently celebrated on 11 November, with Cyber Monday, and Black Friday still to come. Now as consumers eagerly await December’s biggest retail event of the year, Christmas, just what adjustments are being made to supply chains and logistics solutions, to ensure that the festivities will be delivered on time.
As England entered a second lockdown on 5 November, many non-essential retail stores and all hospitality venues were forced once again to close. So close to the festive period, this news was crushing, being the time of year which many businesses usually rely upon to boost their revenue before the end of the year. Especially small independents.
Yet despite this devastating news, consumers have been able to continue to support small businesses and supermarkets alike, through online retail throughout the pandemic. A trend that companies hope will follow throughout the Christmas holidays.
Statistics from Fablious show that these rises in online shopping have been mainly shaped by an increase in demand for online greetings cards, grocery shopping, and online commerce for fashion and general retail items. Amazon saw a 45% increase in money spent on site, with 40% of that relating to Amazon Prime, alone, and overall lockdown #1 witnessed a 17% increase in consumer spending online.
This increase in spending, notes a marked change in consumer behaviour. A change which supply chains and logistics providers are learning to base their new distributions strategies upon.
Previously, supply chains’ distribution strategies would be built upon the point of location and cost. Warehousing’s focus, traditionally, was storage and distribution. Yet with the pandemic already shaping consumer’s shopping habits, and a busy festive period about to start, the focus for many has now shifted instead to adopting omnichannel operations and having the flexibility to manage supply.
Many are considering a reversal of reliance upon lean supply chains with low inventory, and instead are investing in increasing their amount of facilities, and stocking inventory across multiple locations, to fulfil supply and demand.
With these changes being administered to remedy the supply chain shock caused by the pandemic and the first lockdown, logistics providers now also need to be prepared for the wave of this second lockdown, with the festive period in tow.
Looking for different ways to successfully expand their reach among customers, supply chains can no longer be rigid in their tradition of maintaining a core capacity of warehousing and emergency capacity to fulfil peaks, if they wish to be successful. Now is the time for businesses to begin building greater resilience into their supply chains, and introduce higher levels of inventory and strategic agility into their networks. Reports from commercial property agents Savills show that these changes are already taking place, with demand for extra logistics floorspace massively outpacing supply, and predictions for warehouse demand to increase by 24.6 million square feet by 2025.
So as the eCommerce sales approach and Christmas shines on ahead, the lessons learnt from this year have taught many companies to accept peaks as the norm, as opposed to the anomaly.
With news of a vaccine soon to be available, we hopefully won't be in lockdown forever. Yet despite masks being made mandatory in shops on 24 July, many shoppers seemingly continue to favour online shopping as the safer option and cause the changes we have witnessed in consumer behaviour, to remain.
The pandemic disruption has revealed the delicate interconnectedness of supply chains, and those that wish to survive must be willing to address the major weaknesses in their traditional operations and begin to invest in trade analytics and supply chain intelligence tools to improve visibility from end to end and improve their resilience to interruptions.
Transparency, forecasting supply and demand, and agile crisis management, can help to mitigate future risks and disruptions for supply chain management and logistics planning alike, throughout the festive period, and beyond.
SCN can help to future-proof your business plans and warehouse design.
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