THE HOLIDAY SEASON IS NOT YET OVER, BUT ALREADY WE ARE
seeing ways in which retailers and their carriers are tweaking their systems to meet the new norms of holiday shopping.
For instance, in early November, Reuters reported that many leading
retailers, including Macy’s, Kohl’s, and Nordstrom, were stocking less
holiday inventory than in previous years. Their aim is to reduce overstocks and avoid massive discounting. Many plan to rely on their online
sites to fill the void if stores run low on stock.
These same retailers, according to Reuters, also spread out their
orders with suppliers this year. That’s actually good news for both suppliers and the retailers’ own distribution operations.
Traditionally, suppliers and retailers experienced huge
peak-season pushes that required them to hire additional labor and build facilities with higher capacities
than normal volumes would dictate.
Balancing distribution throughout the holiday season helps everyone in the supply chain cope with the
crush. This follows trends in recent years of customers
wanting smaller-quantity orders shipped more frequently—a strategy that often took a vacation during
the holidays. However, this year, more retailers are
relying on their suppliers to warehouse their holiday
products for them until needed.
Another tack taken by retailers this year was to
charge more for online products as a way of driving
traffic to their stores. They also emphasized in their advertising the
convenience of ordering online and picking up in stores. Who knows,
maybe when they go in to pick up their order, they’ll see that perfect gift
for Aunt Sally.
However, this does not mean that shoppers are heading to stores in
droves. Amber Road’s recent “Trade Trends Report” shows that 81 percent of holiday shoppers still plan to buy some gifts online.
All this online shopping affects parcel carriers as well. This season, UPS
expects to handle 750 million packages—an increase of 6 percent over
the last holiday season. UPS took steps this year to address the higher
costs that come with increased demand on its resources. These included
instituting surcharges on residential deliveries during selected weeks.
Retailers themselves are extending the traditional Black Friday and
Cyber Monday deals to a week or more to help spread out their distribution workload.
With many of these holiday initiatives, it seems supply chains are better managing customer demands and expectations this year in a bid to
match them to their distribution capabilities.
bigpicture
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