The Black Friday / Cyber Monday (BFCM) weekend is in a matter of days. Yet, supply chain disruptions persist, which raises the question—what’s next for the 2021 holiday season?
Key Takeaways
- November and December sales will rise between 8.5% and 10.5% YoY
- Online out-of-stock notifications are up 172% YoY
- Consumer prices are up 6.2% YoY
- Two-thirds of retailers will offer same-day delivery by the end of 2021
Supply chain disruptions are no secret; port congestion, labor shortages, and delivery delays make headlines every week. As the Black Friday / Cyber Monday weekend approaches, retailers and brands grapple with how products might not make it to shelves. Consequently, 61% of consumers began shopping for the holidays ahead of BFCM to get the products they want on time. But as in-store Black Friday shopping makes a comeback, consumers and retailers alike face implications from potential stockouts.
Supply chain bottlenecks drive inflation #
A national labor shortage, limited capacity, and higher logistics costs inevitably increase consumer prices—inflation at its finest.
The country is in the middle of “The Great Resignation.” Approximately 4.4 million Americans quit their jobs in September 2021
The physically demanding nature of jobs in logistics, lower wages, and a lack of flexibility in hours impact hiring and retention rates. The average turnover rate for logistics workers is sitting at 31%
With a strained workforce unable to move and process goods, delays happen. More than 33% of U.S. shipments flow through Southern California’s ports, which are currently experiencing 25-30 day delays
For containers that sit idle for at least nine days, ports are charging $100 per container per day to move containers more quickly, increasing in $100 increments each successive day—another hit to shippers’ margins. This applies to 47% of the backlog at the Port of Los Angeles
Warehouse prices are at a fourth-consecutive all-time high—hitting 89.8 on the Logistics Manager Index, a level that LMI classifies as a significant increase in price from the all-time average of 72.7
Though peak-season spending isn’t slowing down, consumer prices are up 6.2% YoY
Shippers aim to satisfy shoppers, despite Q4 challenges #
Walmart, Amazon, Best Buy, Costco, Lowe’s, Target, and Wayfair are among retailers that implemented pre-Black Friday promotions to encourage shoppers to buy early. And businesses are expanding their fulfillment operations to meet customer expectations better.
60% of retailers currently offer BOPIS, an 18% increase since 2020
55% will offer curbside pickup to offset in-store traffic, an 67% increase since 2020
Two-thirds of retailers will offer same-day delivery by the end of 2021
Two-thirds of retailers will offer same-day delivery by the end of 2021
But each of these offerings requires a different labor mix: In-store associates, warehouse fulfillment workers, last-mile delivery drivers. Big retailers are offering higher pay, access to education, and other benefits to attract and retain talent during the peak season. However, a diluted labor pool presents additional challenges:
61% of logistics providers say hiring peak-season labor is difficult
Peak-season hiring incentives will continue, which impacts margins—63% of logistics providers say wages will increase through H1 of 2022
Mass hiring efforts take a toll on productivity: New eCommerce fulfillment workers need one month to get up-to-speed on job duties
Consumers embrace omnichannel retail #
Despite ongoing supply chain challenges, BFCM sales will increase in comparison to 2020. Holiday shoppers plan to use a mix of eCommerce, in-store, and curbside pickup options during peak-shopping weekend.
eCommerce remains a dominant channel this season, with 78% of consumers planning to shop online for the holidays
With consumers less anxious about being in public spaces, 64% of holiday shoppers will shop in-store on Black Friday, up 51% YoY
Shoppers will still avoid crowds, and running out of time to make in-store purchases in a consistent holiday trend. Subsequently, curbside pickup will peak in the days before Christmas and could surpass 40% of all online orders
November and December holiday sales will rise between 8.5% and 10.5% YoY, reaching $859 billion in sales. Last year, sales rose 8.2% from 2019 to $777.3 billion. Before the pandemic, a 4.4% YoY increase in holiday spending was standard
64% of holiday shoppers will shop in-store on Black Friday
But can retailers deliver? Ongoing supply chain disruptions through the end of Q4 threaten shippers’ margins and customer satisfaction.
Stockouts are a big problem ahead of BFCM. Retailer out-of-stock notifications are flooding consumers, up 172% since this time last year and up 360% since 2019
The most popular out-of-stock categories include apparel, sporting goods, baby and toddler products, and electronics
As much as 20-25% of the goods stuck at the ports are unlikely to make it onto shelves in time for Black Friday
Out-of-stock notifications are flooding consumers, up 172% since this time last year and up 360% since 2019
Looking ahead #
BFCM is days away. Shoppers face stockouts and inflated costs; retailers face ongoing supply chain bottlenecks. Multiple fulfillment options (BOPIS, curbside, in-store, eCommerce) increase the chances of inventory miscalculations. Beyond peak season, omnichannel retail growth increases the need for capacity—labor, warehouse, and transportation. However, supply is limited, and the long-term effects of inflation will be telling.
Reports on Black Friday / Cyber Monday performance typically come out in December, so stay tuned for results and key learnings from the peak-season shopping weekend.
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