The Big Mistakes Retailers Make In Preparing For Holiday Peak Season

The challenges that retailers face every holiday peak season have been exacerbated by the Covid-19 pandemic, which accelerated the trend towards online shopping and highlighted weaknesses in the supply chain.

As we race towards 2022 peak season, consumers remain nervous about supply chain reliability. According to a recent Prosper Insights & Analytics survey, a majority of consumers (51%) expect product shortages to continue for at least the next six to 12 months.

Meanwhile, the same survey found that, despite recession fears, consumers are still planning to be big spenders these holidays. Only 20% currently intend to spend less on holiday gifts than they spent last year, and 12% plan to spend more.

So, what should brands be doing now to shore up their ability to deliver on sales and customer service in Q4?

Marc Gorlin is founder and CEO of crowdsourced delivery platform Roadie, a UPS company. Roadie reaches more than 20,000 zip codes – the largest local same-day delivery network in the nation. The company works with Fortune 500 major retailers as well as small business retailers nationwide.

Gary Drenik: Marc, it’s good to have you with us. From your perspective, what’s the biggest mistake that retailers make when preparing for peak season?

Marc Gorlin: There’s so much uncertainty in this environment – you can’t just do the things that worked last year, or in 2020, or especially in 2019, which is ancient history in the retail world. I’d say the biggest mistake a retailer can make this holiday season is not preparing for the unexpected. You have to learn the resiliency lessons of the last few years.

Peak 2020 was all about the failures of the last mile. Peak 2021 was about the first mile falling apart. This year is shaping up to be its own special kind of weird. People have too much of the wrong kinds of inventory. You might have a mountain of home gym equipment to sell, but that won’t do you much good if people are going back to the gym. So, retailers have a glut of goods they can’t easily sell clogging up their aisles and shelves. There’s also the labor shortage. Retailers are simply not going to have the amount of workers they’re used to having for the busiest time of the year.

Economic conditions are going to be a factor, specifically the effects of gas prices and inflation. Thankfully, gas prices are under $4 again and there are signs that inflation is starting to cool. But it’s been a difficult year to be a consumer, and it’s safe to assume most folks will shop strategically this holiday season.

For example, consumers probably won’t want to go driving around town to brick-and-mortar stores looking for something. Why would you waste gas money you could put toward another gift? Of course, you could call the store to see if they have it in stock before you make the trip. But again, pretty much everyone is understaffed right now, and it’s unlikely the store can spare the staff to run and see if your item is still in stock.

Practically, that’s going to make e-commerce the best choice in most cases. So how do you solve for that? With the right mix of last-mile delivery partners to meet that demand.

Adding a crowdsourced delivery partner like Roadie enables retailers to handle unexpected spikes in orders and expand their reach to more customers. It frees up capacity with other delivery partners by moving SKUs that aren’t the best fit for them over to the crowdsourced network. And of course, it gives your customers something they’re demanding: ultrafast delivery. It’s the best of both worlds for your customers, who can shop from their couches and still get their gifts in plenty of time. That’s how retailers can win the last mile this year.

Drenik: What about the first mile and the rest of the supply chain? What should retailers be doing there?

Gorlin: By focusing on the things, they can control; retailers can remodel their supply chain for resiliency. Although you can't mitigate all your risks, it's important to know where your biggest threats are and what’s most likely to prevent you from getting your goods.

A common supply chain risk area is heavy reliance on a single supplier. This is known as concentration risk and can leave you with few or zero options if your key supplier can’t meet your needs. Having several vetted backup suppliers ready to go puts you in a better position to keep up with demand throughout peak season. Diversifying your supplier base can also help create a more competitive supplier landscape.

Retailers should monitor their suppliers’ capacity, and that means accurate forecasting backed up by ongoing communication and action. This isn’t a set-it-and-forget-it time – in the retail world, circumstances can change quickly, and retailers must be ready to pivot.

Drenik: How can warehouse operations help set up a retailer for peak-season success?

Gorlin: Before you begin moving product for peak season, you need to make sure your warehouse inventory is in order. If retailers have slow-moving or deadstock products that are taking up space, they could consider running a flash sale or other promotion to make space for more popular, fast-moving SKUs and help avoid out-of-stocks.

It’s smart to also perform a warehouse and equipment audit to help optimize efficiencies and safety during high-volume, high-stress times. Every minute will count when your warehouse is working at maximum capacity.

Also, the time to get started with a crowdsourced partner is not October, it’s right now. While a solution like Roadie can ramp up very quickly, there’s some prep on the retailer side to do too. Like training warehouse staff, creating an easily accessible staging area for crowdsourced orders, and installing appropriate signage for drivers inside and outside the facility. Reserving parking for crowdsourced drivers is a good idea. The spots should be big enough to fit any size vehicle from a compact sedan to a cargo van. Onboard now, test, get your team trained on the new processes, and you’ll be in a great place by November.

Drenik: Any tips for reducing peak-season volumes without reducing sales?

Gorlin: One strategy is to offer peak-season deals early to pull consumer demand forward. Consumers are kicking off their holiday shopping earlier than ever in a post-Covid-19 world, so that makes sense anyway. Why save all of your holiday deals for Thanksgiving and beyond when you could just make those sales early?

Making seasonal deals available weeks or months before Black Friday can ease some of the pressure and reduce the likelihood that anything will go off the rails. It’s easier on your staff, less stressful for your customers, and puts less strain on your operations overall.

Drenik: Thanks for your time and insights, Marc. Certainly, a busy time ahead for retailers and hopefully they’ve already started planning for it.