Slowing sales maybe an early sign that retailers should prepare for a flurry of last-minute Christmas shopping. Chris White, Chief Delivery Officer at fulfilmentcrowd looks at how eCommerce retailers can ready their supply chains to effectively manage a late peak.
Cautious consumers
Typically, as we move from September to October, we often see a steady growth in sales volumes and the green shoots of the year’s busiest retail peak. Consumers start to get organised for Christmas, spreading out their shopping for gifts to better manage the costs of the festive season. There are early signs this isn’t happening this year.
fulfilmentcrowd’s analysis of sales across more than 450 SME-sized eCommerce retailers in September shows a 10% decline in total order volumes compared to the same time last year. This reflects a wider downward trend in consumer purchasing. ONS retail sales data showed non-store retailing (predominantly online retailers) sales volumes fell by 2.6% in August 2022. Figures from the British Retail Consortium and KPMG sales monitor for September showed a jump in retail sales on the back of inflation, but shrinkage in overall volumes.
Signs of a late Christmas peak
Consumers seem to be holding back because of the cost-of-living crisis. There are widespread concerns about the impact of rising energy bills and inflation, and consumers may be acting more cautiously as a result. While this may imply a drop in total retail sales this Christmas, it may also be an indicator of a late Christmas peak. Consumers will still be keen to celebrate and, in the current climate, are more likely to hold out for the value of last-minute promotions.
Controlling the Christmas cut-off
One of the first steps towards managing a late peak is to determine the final cut-off for shopper orders, and to then tease this date early in December. This can help to create a sense of urgency amongst customers and encourage sales earlier in the month, rather than demand spiking and risking capacity issues in the final week before Christmas Day.
Accurate supply chain data and modelling is critical to pinpointing the cut-off date for customer orders, and it’s better to start interrogating this sooner rather than later. Further industrial strike action may cause a backlog in customer deliveries during the festive season, which means final order dates may need to be earlier than previous years to avoid incidents of shoppers buying on time but not receiving goods before Christmas.
Regaining control
Retailers should also seek to regain control of when consumers want to purchase, instead of accepting last-minute shopping as being the norm. If stock inventory is tracked throughout October and November and shows below-average sales, it should be used to inform time-limited promotions. The desire to shop last minute is driven by knowledge amongst shoppers that retailers prefer to empty their warehouses of festive stock and will cut prices when the shopping days are running out, instead of being left lumbered with goods they can’t sell for another year.
Time-limited promotions and flash sales in November can encourage consumers to shop well ahead of the final days before Christmas Day and provide retailers with greater ability to plan and control the movement of goods, whilst also maximising sales opportunities.
This year, monitoring the performance of stock inventory during late October and early November will be even more business-critical to making effective Black Friday decisions. If sales are down, retailers may want to cash-in on the consumer appetite for value by dialling-up promotions during the Black Friday weekend. Similarly, they may want to act outside of the competitive Black Friday retail event by running earlier special offers.
Keep taking stock of supply chains
If Christmas shoppers are increasingly price-sensitive, and this is impacting selling prices, retailers should look to their supply chain partners for added value to help protect margins. Optimising the picking, packing and delivery of goods can deliver marginal gains that stack up to big efficiencies – especially as the scale of orders grows, or as retailers experience fluctuating sales demand. Time and cost savings can be made on deliveries to customers, warehousing, and the movement of stock, all of which can be managed more effectively through a supply chain that has the right infrastructure and people in place to quickly respond.
A fulfilment partner can also help add value through building brand reputation and customer loyalty. They can ensure the high quality of orders being sent to customers, and support personalisation and customisation. For example, bespoke messaging and marketing can be added to customer orders to encourage repeat purchasing or to notify shoppers about the cut-off date for final Christmas orders. This can strengthen sales appeal beyond discounts and create another touchpoint for helping manage the timing of purchasing and peak demand.
Chris White, Chief Delivery Officer at fulfilmentcrowd
