With holiday shopping mainly taking place online, attention turns to the backbone of this activity: the nation's warehouse and logistics operations. Can they handle the onslaught? Signs point to yes, but at the same time there are definitely hints of strain. Retailers, though, are doing their best to handle the extra load, in some cases jerry-rigging systems.
The increase of online holiday shopping and deliveries puts added strain on supply chain systems, says Kris Bjorson, co-lead of the Retail and Industrial Task Force at JLL in a recent post.
Retailers have been making an effort to extend the holiday season and curb holiday shipping delays by advertising deals online in early November, according to Bjorson. Delivery companies are also hiring thousands of additional drivers to alleviate delays, and retailers are emphasizing alternative shipping services.
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"Some are staggering holiday deals to help offset supply chain capacity, capture market share and avoid last-minute bottlenecks," Bjorson says. This method also allows cash-strapped consumers who need those deals to shop earlier and still receive their products on time."
Resilient supply chains are also a focus, according to Bjorson. Retailers are not only bringing in more inventory to all nodes (retail and distribution), they are also continuing to invest in robotics and technology to flatten the reliance on seasonal workforce support.
"Thinking about retailers and their supply chains for the 2020 holiday season, there is a naughty and nice list of challenges," Bjorson says. "On the naughty list, expect indecisive consumer purchasing patterns, inevitably mishandled inventory and increased shipping charges and delays from transportation service providers. On the nice list, e-commerce builds on its 2020 growth pattern and there's more curbside pickup, BOPIS and deliveries from physical stores to further evolve fulfillment obligations of bricks and mortars."
Retailers, though, are taking steps to meet the challenge. Amazon, for example, has opened a huge number of distribution centers this year. It has also stepped up its hiring for the holiday season with plans to bring on board 100,000 workers. This follows 175,000 new jobs added between March and April and then an additional 100,000 workers in September.
Other retailers are deploying creative solutions to support the demand for online purchases.
Walmart is setting up what it calls "pop-up E-commerce Distribution Centers" (eDCs) to meet the growing demand for online orders. The company's facilities that have traditionally only supplied products to stores are now equipped also to fulfill online orders.
Walmart says that setting up these eDCs enables it to move more product to customers quickly. Also, it can pop up an eDC anytime its supply chain network experiences peak demand.
Other retailers are also finding creative ways of handling holiday logistics. The New York Times reports that Macy's recently designated two stores in Delaware and Colorado to become fulfillment centers that processed online orders and returns instead of being places for customers to browse and shop.
Jeff Gennette, Macy's chief executive, told the Times that these stores were part of an experiment for the company as it responds to customers buying more online and demanding fast shipping for free.
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Leslie Shaver
Les Shaver has been covering commercial and residential real estate for almost 20 years. His work has appeared in Multifamily Executive, Builder, units, Arlington Magazine in addition to GlobeSt.com and Real Estate Forum.
