November 28, 2017
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Avoiding a Blue Christmas

Cutting back on store inventories, charging more for online goods, and imposing surcharges are just a few of the ways that retailers and their carriers are coping with the holiday crush.

By David Maloney

The holiday season is not yet over, but already we are seeing ways in which retailers and their carriers are tweaking their systems to meet the new norms of holiday shopping.

For instance, in early November, Reuters reported that many leading retailers, including Macy's, Kohl's, and Nordstrom, were stocking less holiday inventory than in previous years. Their aim is to reduce overstocks and avoid massive discounting. Many plan to rely on their online sites to fill the void if stores run low on stock.

These same retailers, according to Reuters, also spread out their orders with suppliers this year. That's actually good news for both suppliers and the retailers' own distribution operations. Traditionally, suppliers and retailers experienced huge peak-season pushes that required them to hire additional labor and build facilities with higher capacities than normal volumes would dictate.

Balancing distribution throughout the holiday season helps everyone in the supply chain cope with the crush. This follows trends in recent years of customers wanting smaller-quantity orders shipped more frequently—a strategy that often took a vacation during the holidays. However, this year, more retailers are relying on their suppliers to warehouse their holiday products for them until needed.

Another tack taken by retailers this year was to charge more for online products as a way of driving traffic to their stores. They also emphasized in their advertising the convenience of ordering online and picking up in stores. Who knows, maybe when they go in to pick up their order, they'll see that perfect gift for Aunt Sally.

However, this does not mean that shoppers are heading to stores in droves. Amber Road's recent "Trade Trends Report" shows that 81 percent of holiday shoppers still plan to buy some gifts online.

All this online shopping affects parcel carriers as well. This season, UPS expects to handle 750 million packages—an increase of 6 percent over the last holiday season. UPS took steps this year to address the higher costs that come with increased demand on its resources. The carrier instituted surcharges on residential ground packages delivered between Nov. 19 and Dec. 2—a period that covers Black Friday and Cyber Monday. No surcharges will be imposed between Dec. 3 and 15, but the surcharges return Dec. 15 through 23.

Retailers themselves are extending the traditional Black Friday and Cyber Monday deals to a week or more to help spread out their distribution workload.

With many of these holiday initiatives, it seems supply chains are better managing customer demands and expectations this year in a bid to match them to their distribution capabilities.

About the Author

David Maloney
Chief Editor
David Maloney has been a journalist for more than 30 years and has been with DC VELOCITY since April of 2004. Prior to joining DCV, David was senior editor for Modern Materials Handling, where he reported extensively on distribution and supply chain operations. David also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. David combines a background of reporting on logistics with his video production experience to bring new opportunities to DC VELOCITY readers, including Web-based videos highlighting top distribution and logistics facilities, Webcasts and other cross-media projects. He also is the host and producer/director of Move It!, DC VELOCITY's online program that explains "how the stuff we use everyday gets to us." David continues to live and work in the Pittsburgh area.

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