For weeks, retail focused supply chain management teams have planned and coordinated activities that will commence starting today on the eve of the Thanksgiving holiday and extending through Cyber Monday and then thru Christmas. Countless meetings, endless collaboration with sales and merchandise promotions, inventory and logistics planning all come done to these final weeks of the holiday fulfillment period.

There are a lot of expectations related to this year’s period. This year, the Thanksgiving holiday comes later in November, thus leading to a shorter amount of time for consumers to complete their holiday shopping before the Christmas holiday on December 25. The National Retail Federation (NRF) is predicting a 4 percent increase in 2019 holiday sales, with more than 165 million consumers likely to shop over the upcoming five-day weekend alone.

Retailers have been positioning promotions for weeks including teasing consumers as to what to anticipate. Judging from shopper activity from the prior two years, many consumers exercise their holiday shopping earlier, attracted by the attractive Black Friday and Cyber Monday holiday promotions.

There are the usual cautions as to whether consumers will go all-out in holiday spending, or instead focus on the most attractive bargains. According the NRF forecast, the average spend holiday consumer is expected to be $1047, slightly higher than previous years, a sign of a healthy U.S. economy. Supply chain management teams will obtain important trending data over the next few days.Holiday Customer Fulfillment

All eyes will remain on Amazon and efforts to once again completely dominate online.  As we have noted in prior commentary, competitive online retailers BestBuy, Walmart, Target, among others, have made some significant progress in abilities to compete with Amazon on services and in-store pick-up convenience. Target and Walmart have especially been successful in leverage online grocery and general merchandise customer fulfillment activities from local and regional inventories.

In its latest report of financial performance, Walmart reported very healthy online as well as U.S. store sales gains. On the other hand, traditional shopping mall based general department stores J.C. Penny, Kohl’s and Macy’s reported sluggish sales and store shopping volumes which is not a good sign entering the coming few weeks. Each are very likely to be offering aggressive promotions to unload inventory.

The next few weeks will once again be the test for Amazon’s committed same-day or one-day delivery for Prime members. In April, the online retailer indicated an additional $800 million investment to make one-day free shipping the standard for Prime members. The initial test cam in July with the Prime Shopping day, and the results in meeting commitments were not consistent. Since that time, FedEx has exited all prior contracted air and ground services for the online retailer, hence there is more reliance on Amazon’s independent last-mile delivery firms, UPS, the U.S. Postal Service (USPS) and other carriers. We have already observed increased Amazon related delivery activity from the USPS.

Finally, with retailers expected to import near record levels of inventory, the next few weeks will provide the test as to whether specific purchasing and supply chain inventory planning teams were successful in pulling-ahead inventories ahead of tariff implementations. December 15th is the scheduled implementation date for the next tranche of U.S. import tariffs, mostly impacting consumer goods including consumer electronics, depending on whether the ongoing U.S. and China trade negotiators can come to a successful phase one agreement that includes suspension of this round.

 

Indeed, the coming five weeks will consume the attention of many supply chain management teams along with their decision-making response capabilities.

Supply Chain Matters will be standing by to provide added commentary and insights as events unfold. Stay tuned.

In the meantime, we extend to all of readers a pleasant and restful Thanksgiving holiday with family and friends. And, happy shopping.

 

Bob Ferrari

 

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