While it's not even technically fall yet, the holiday shopping season requires so much preparation from companies at every step of the supply chain that it's already become a major preoccupation. In fact, the calendar is already at less than 100 days until Christmas, so it should come as no surprise that companies are scrambling to make sure they have enough preparations in place for Thanksgiving and beyond.
New estimates from Deloitte show that holiday season retail sales could top $1.1 trillion, up as much as 5% from 2018's period from November to January, and that's despite concerns about mounting trade tariffs and other economic uncertainty. Moreover, it seems expectations for online sales in particular will surge - rising as much as 18% on an annual basis, to between $144 billion and $149 billion.
"The projected holiday season growth is, in part, due to the current health of the labor market. Near record-low unemployment rates, coupled with continued monthly job creation, may encourage people to spend more during the holiday season," said Daniel Bachman, Deloitte's U.S. economic forecaster. "The economy is still growing, albeit at a slower rate. Additionally, we continue to see consumer confidence elevated, which also helps boost holiday spending."
In anticipation of this shopping surge, big-box retailer Best Buy has invested heavily in improving its supply chain efficiency, according to CNBC. This includes installing robots in warehouses outside major metro areas in an attempt to more effectively compete with companies like Walmart, Amazon and Target - all of which offer rapid turnarounds on shipping that were inconceivable just a few years ago. Best Buy only began shipping for online orders within the last five years, but that has been among the company's primary initiatives in the time since.
With that in mind, the company says it has now set aside twice as much for logistics spending this year and next as it had previously, the report said. More recently, that includes shipping full-sized appliances directly to consumers' homes, and that effort accounted for about $1 out of every $9 it earned in sales in the first quarter of 2019.
Shipping to rise sharply
As one might expect, freight shipments around the U.S. are projected to increase sharply as the holiday season approaches, according to Logistics Management. While full data for the third quarter is not yet available, at least some increases were likely already in place toward the end of that period, reversing some recent trends of declines, and ramping up for yet another strong holiday season. That, in turn, will likely lead to spot trucking rates increasing on a year-over-year basis in a way that could be encouraging for freight companies going forward.
With all this in mind, all companies participating in the supply chain should probably ramp up their seasonal hiring efforts, component or product orders and other investments so they can have everything they need in place to hit the ground running for late November.