Posted by on 01.16.18
The holiday retail season is rapidly evolving from a single day to a period of weeks – starting for some retailers in early November and extending into the New Year. According to a survey by website coupon dealer RetailMeNot, 45% of shoppers start looking for holiday gifts in October.
As a result, many holiday deals are available earlier, and multiple promotions (both in store and online) cycle through the season with several key dates beyond Black Friday. There’s Small Business Saturday and Cyber Monday, of course. There’s also Green Monday, christened by eBay a decade ago as the second Monday in December and the second biggest online shopping day of the season. There’s also Free Shipping Day (this year was December 15), and the UPS-dubbed National Returns Day (January 4) when all of those returned packages are delivered back to retailers. Since nearly half of all shoppers place a new order with a return, even the weeks after the holidays are an important revenue stream for retailers.
The media have started to call this phenomenon “Grey November” and, from a logistics standpoint, this shift has significant implications for retail distribution. How do you go from preparing for a very big, but very short peak event to a substantial increase in sales volumes over a more sustained period of time? Planning and managing inventory procurement, storage capacities, seasonal employment, and transportation all have to change to accommodate a longer sales cycle.
This is a situation in which many retailers may want to think outside the box in terms of fulfillment alternatives. Backing up the peak season by several weeks means product needs to be in your DCs earlier and may reside there longer, potentially constraining your existing distribution network capacity. There’s also an opportunity to rethink your inbound product flow. If you don’t need all of your product on Day 1, you may be able to use smaller, more frequent deliveries to enable better inventory turns.
Constraints on available labor for your distribution center may be better or worse in a Grey November peak. Perhaps you don’t need a huge increase in labor, running around the clock, for a Thanksgiving weekend. However, you do need to be able to reach into a steady pool of seasonal workers over the course of the entire holiday season, which may be difficult to find and retain – particularly in markets dominated by fulfillment centers for Amazon, Walmart and the like. Some retailers with significant ecommerce peaks are turning to robotics to help alleviate labor shortfalls. A number of companies, such as Locus Robotics and 6 River Systems, have come to market in recent years with solutions that require little ramp-up time and can work alongside your existing workforce to achieve measurable increases in productivity.
Certainly, the driver shortage and service hour reductions in the transportation industry may be a challenge. Retailers with an import location on one coast and a distribution center on the other may have difficulty finding cross-country truckload carriers. We encountered clients who couldn’t find enough drivers and trucks to meet the needs of the extended peak season. One paid a $6,000 premium per truckload just to get their product through their supply chain.
Of course, the real danger in all of this is the potential for service failures. The stock-outs, delayed deliveries, and incomplete/inaccurate shipments can result in lost revenue and (worse!) lost customers.
As the Grey November trend is likely to continue in 2018, now may be the time for retailers to begin thinking about options for next year. If your distribution network capacity could be maxed out by an extended holiday peak season next year, you may want to consider fulfillment alternatives. A pop-up distribution center, a temporary contract with a 3PL provider, or shifting e-com fulfillment to your stores may be practical solutions.
Now celebrating 60 years in business, Sedlak started in retail and we have built an unsurpassed body of supply chain knowledge and experience in the distribution-intensive and omni-channel environments of the retail industry. Our precision data analytics, focus on process improvements, and intelligent use of technology help retailers achieve operational efficiencies and satisfactory return on investment. To learn more, complete the Contact Us form below.