As a retail nerd, yeah I said it, peak retail season is one of my favorite times of the year. Technology projects sprint to completion prior to the Thanksgiving holiday to provide stability and efficiency for peak. Retailers compete during Black Friday sales, customer purchasing incentives and temporary holiday offerings to capture as much consumer spend as possible. One thing that has remained consistent in 2023 through challenging macro-economic conditions is consumers are spending at an increasingly high rate. In October, total retail sales, excluding automobiles and gas, were down .08% from September and up 2.57% year over year.
Some projection numbers to chew on…..
Holiday retail sales are likely to increase between 3.5% and 4.6% in 2023 for the November-January timeframe, according to Deloitte’s annual holiday retail forecast. Deloitte also forecasts e-commerce sales will grow between 10.3% to 12.8% year-over-year during the 2023-2024 holiday season. This will likely result in e-commerce holiday sales reaching between $278 billion and $284 billion this season.
Recent data from Ware2Go shows that 73% of merchants expect higher holiday sales in 2023 despite economic headwinds.
Some numbers from The 2023 Consumer Insights: Unpacking Holiday Travel Trends survey….
Consumers plan to travel more this holiday season than in 2022: While just 40% of U.S. adults surveyed traveled last holiday season, a notable 54% are gearing up for holiday trips this year.
Price was a driving factor last year and maybe this year, too: 45% of the 60% of the consumers who didn't travel in the previous holiday season attributed their decision to affordability concerns, either due to steep prices or insufficient travel rewards. This year, value remains at the forefront of travelers' considerations.
Loyalty programs can help consumers offset travel costs: 42% of consumers would travel more during the holidays if they got more discounts through their loyalty program, and 32% would if they had more points available to help offset the cost of the trip.
Loyalty programs could be offering members more: Surveyed consumers said they would welcome their loyalty programs' help with holiday travel costs, but 45% reported that their loyalty programs aren't doing anything at all to offer benefits for the holiday period.
During the peak holiday shipping season, companies are once again increasing their hiring efforts, though some are setting slightly lower targets for 2023 compared to the previous year. Amazon and DHL eCommerce are expanding their workforce, while the U.S. Postal Service and Radial are hiring fewer temporary employees due to decreased shipping demand from pandemic levels.
Amazon is aiming to hire 250,000 people for various roles across the U.S., a significant increase from their 2022 goal of 150,000 hires. They are also investing $1.3 billion in pay increases, with average hourly pay for fulfillment and transportation employees reaching around $20.50.
UPS is maintaining its 2022 hiring goal of over 100,000 seasonal employees, with a focus on delivery drivers, CDL drivers, and package handlers. They have noted that many seasonal workers from the past two years secured permanent positions.
FedEx has not disclosed their hiring goals but still has job openings for delivery drivers and package handlers in various locations.
The U.S. Postal Service is hiring 10,000 seasonal employees, a reduction from the 28,000 they hired last year, attributed to retaining workers for long-term career positions.
Target plans to add nearly 100,000 seasonal employees, including warehouse roles in over 50 supply chain facilities.
DHL eCommerce is looking to hire around 2,600 workers, up from more than 2,000 last year.
Radial intends to hire over 9,500 seasonal workers in its U.S. and Canada fulfillment centers, down from their 2022 goal of more than 15,000.
Geodis, a logistics provider, is aiming to hire nearly 3,000 seasonal workers for its U.S. and Canada operations, a reduction from the previous year's goal of about 5,000. Positions include material handlers and equipment operators.
Some holiday shopping considerations……
Inventory accuracy (surplus and shortage) will rear it’s ugly head through peak and retailers who best manage inventory will outperform the competition. Many retailers’ surplus position will allow for creativity in the promotional space to move inventory prior to peak. I’m expecting many retailers dealing with surplus inventory to pull their efforts to the left and offer incentives earlier in the season than usual.
Brick-and-mortar traffic will be at an all-time high in 2023 with niche/boutique retailers showing the largest YoY growth.
Retailers will struggle with labor pains more than ever. Unemployment rates remain low and therefore finding part-time help will suffer.
To remain competitive during the holiday season, investing in people will be key to customer success.
Increasing inflation rates will drive growth in “needs” holiday spending rather than ‘wants”. I believe consumers will prioritize necessities that feel like “splurge” items more than ever this holiday season.
To take a deeper look at the impact of people on peak holiday shopping, fourth-annual UKG retail survey, titled The People-Driven Side of Peak Selling Seasons, highlited the following
Most retailers (87%) are more optimistic this year heading into the holiday shopping season, yet warn the lines might be long and their stores understaffed, mainly due to poor shopper behavior and a failure to prioritize what matters most to their people
1 in 3 retailers (32%) say staffing shortages limit their ability to adequately care for customers at least weekly, and 75% say shopper expectations are higher than what their stores can deliver.
1 in 3 retailers are dealing with angry or aggressive shoppers in stores at least weekly, and retailers say this and increased exposure to other adverse situations (e.g., increased theft/loss in stores) are dissuading people from working in retail.
82% of retailers say store employees want more schedule flexibility than they currently provide, and 1 in 3 say managers are quitting in order to get it.
93% of retailers say their stores are struggling to meet sales goals, and nearly a third (31%) say staffing shortages are the cause.
I’m interested to hear from you, what are your thoughts as the holidays approach?