Last year, we experienced an incredibly abnormal holiday season. Between unseasonably warm weather, an oddly quiet Black Friday, prolonged holiday deals and less crowded in-store experiences, the 2015 holiday shopping season stood out from the norm for a variety of reasons. In fact, some may even argue we’re at a turning point for holiday retail, with dramatically changing consumer shopping habits encouraging retailers to rethink their sales and distribution strategies.
It’s always fun this time of year to look at the successes and challenges of the holiday shopping season. The insights we gain from these stories, which often involve supply chain lessons, help us predict where the industry is headed and learn from the experiences of others. Here are a couple holiday retail stories worth a read as we move forward in 2016.
Cyber is the new black: As ecommerce continues to rise, Cyber Monday eclipses Black Friday in sales
Black Friday sales dropped from $11.6 billion in 2014 to $10.4 billion in 2015, while online sales between Thanksgiving and the following Sunday were up 17 percent this year, with total ecommerce sales reaching $8.03 billion. Consumers are swapping the historically stressful in-store experience, defined by long lines and rowdy crowds, for the more comfortable and low-stress online shopping experience to fulfill their holiday purchases.
The compositions of their online shopping carts are also looking a bit different. With free shipping becoming a customer expectation, consumers are being more selective with their purchases and ordering only a couple items from each website they visit. This trend is contributing to a higher volume of smaller shipments and increasing logistics costs for retailers, ultimately eating into retailers’ peak season margins. To counteract these costs and capture as much profit as they can, retailers are choosing the cheapest shipping options available to them, which is creating a strained supply network and shipment delays, and the increased risk that consumers won’t get their purchases before the holiday.
Tip for this year: Give yourself a cushion of at least a week for online orders, so you aren’t squirming uncomfortably when grandma doesn’t have anything to open on Christmas morning.
Some things don’t change: The scramble for the perfect holiday gift
Despite a relatively boring and chaos-free Black Friday, as in years past, there was one coveted, in-demand gift this holiday season that caused quite a frenzy: The Yeti Rambler Tumblr, a $30 stainless-steel, insulated mug created by Austin, Texas-based Yeti Coolers, was a top item.
Why all the commotion over a mug? This seemingly simple product comes from a luxury travel mug retailer known for its $400 coolers. The low price tag and practicality of the mug – it’s designed to keep your beverage cold or hot for abnormally long stretches of time – makes it the perfect expensive-looking holiday gift that won’t break the bank. Unfortunately for shoppers late to the game, Yeti didn’t make enough mugs, and retailers were having trouble keeping the product in stock and meeting consumer demands. Many retailers have decided to only sell the mug in-stores to avoid losing profit on shipping the inexpensive cup.
Successfully forecasting and meeting consumer demands and preferences is an extremely difficult task, and preparing the supply chain to meet these requests during uncertain seasons makes it even more of a challenge. With holiday shopping increasingly moving online, it’s getting harder to juggle and plan inventory, fulfill orders from distribution centers, deliver products to consumers quickly and keep shipping and delivery costs to a minimum. Turning a profit in the digital era is a feat most retailers are struggling to meet.
With the sweeping changes we’ve seen this year, 2016 will certainly prove to be an interesting year for retail. As consumer shopping habits continue to shift, retailers must stay ahead of trends to be successful.
Interested in what 2016 has in store for the retail supply chain? Forbes interviewed several of our clients for their expert opinions and predictions.