Supply Chain Strategies in Peak Retail Season

Retailers are now in the ‘golden quarter’, an all or nothing commercial opportunity. According to PWC, Black Friday sales in the UK are predicted to reach £7.1 billion with over 80% of the UK population expected to take part, each spending £278 on average.  

By mid-November, the majority of retail supply chain leaders we spoke with felt customers hadn’t yet ‘dialled into Christmas’, reflected in physical store and online trading figures. One commented: “We know they’re there, but we haven’t heard them yet”.

The latest Office for National Statistics data show supermarket sales fall during late summer and into September, representing the largest month-on-month fall, citing poor weather and tightening on luxury food. There was more growth in non-food categories, particularly computers and telecoms. Retail planning teams are observing continued behavioural pricing on Amazon with great interest.

December 23 is expected to be a high-volume sales day, with one grocery retailer emphasising providing “year-round easy food” in stores to feed children as families rush into the midweek Christmas “mission”. A major clothing and merchandise retailer stressed balancing capacity, availability and distribution as an intensely planned and statistically managed wager on sudden, intense demand.

Customer behaviour during peak season is complex. Multiple data sets highlight that the younger demographic are major participants in Black Friday, while a significant number of shoppers distrust Black Friday pricing transparency. This has led some retailers to make fixed price pledges to attract these sceptical customers. Retailers also plan for male shoppers to enter the fray later in the season. Platforms like Facebook Marketplace, Etsy, and Vinted are increasing the flow and volume into the carrier market.

Retailers are watching the impact on spikes in flow from “live commerce” through platforms such as TikTok Live and Whatnot. Handling online digital sales, maximising the traditional in-store experience - such as gift wrapping and physical customer service - as well as in-store click & collect, all add to the surge of customer expectations.  

Reverse logistics is now seen as a strategic opportunity to win customers. A positive returns experience for customers is arguably as crucial as getting returns back in the flow and in stores ready for the January sales, as customers will base future purchasing decisions on the simplicity of returns.

Some retailers are stemming the flow of returns through fees, or by incentivising customers to keep larger purchases through minor rebates or advice on remedying minor damage.

We increasingly hear the analogy of supply chain leaders becoming merchandisers and strategists, and merchandisers and commercial leaders recognising the granularity and fitness - or deficiency - of their supply chain and fulfilment capability. Supply chain leaders must deliver the commercial ambition and will tweak and refine logistics throughout peak. 
 
Briefings on supply chain leadership searches focus on both strategic and tactical skills. Our clients need supply chain leaders who can collaborate with colleagues in merchandising, commercial, finance, and technology departments to commit to a shared vision of agile supply chains focused on customers. In two recent searches, the Supply Chain Director reported directly to the CEO. 

The well-known American retailer H. Stanley Marcus said: “Consumers are statistics. Customers are people”. This year’s compressed peak will expose the quiet brilliance, or frustrating almost-ran, of retail supply chain and fulfilment in underpinning the customer experience.

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