Is Peak Season Turning Into a Year-Long Trend?
Those impacted by peak season each year may shudder at the possibility that its boundaries are becoming increasingly blurred. Just imagine tolerating the annual mad rush of the retail and shipping worlds without a predictable beginning and end.
With the onslaught of disruptions that have impacted the supply chain over the past several years, some experts are postulating that “peak season” as previously defined may be a thing of the past. Instead, some companies say they’re now operating with a peak-season mindset all year long.
Here, we’ll take a look at results from several surveys related to peak season 2022—including one that examined how inflation is expected to impact consumer spending this year.
The Deposco Survey
According to a survey conducted by Supply Chain Dive’s studioID in collaboration with Deposco, some supply chain executives are taking a different view of peak season than they have in the past.
For the survey, the executives polled shared their predictions, expectations, and preparations for peak season 2022. A September press release provided an overview of the results.
“The survey uncovered changing perceptions about peak season, ongoing struggles with labor as both a challenge and a solution, and the ability of current systems to handle fulfillment requirements during peak season,” the release said.
Five “significant” findings about peak season that were uncovered include:
The concept of peak season may be evolving. “Just over half of companies say they now manage peak season differently from the rest of the year, and just under half report their peak season is now a year-round event. ‘Demand is up across the board,’ explains Michael Johnson, director of business consulting at Deposco. ‘There will still be peaks and valleys, but, for many, what used to be peak season in terms of fulfillment is now the new normal because of e-commerce and changing expectations.’”
2022 peak season is expected to be tough. “Three out of five (59%) expect this year’s peak season to be more challenging than 2021. Another 33% expect upcoming peak season to be just as challenging as 2021. The majority (60%) cite inflation and a declining economic outlook as issues of most concern. The vast majority (88%) expect to see higher prices for supplies and services due to inflation.”
Delivery delays, escalating pricing, and labor issues are top concerns. “Roughly half of supply chain executives report these three concerns as they enter peak season: delivery delays (60%), escalating pricing (48%), and labor shortages, turnover, and retention (48%).”
Hiring, increasing held inventory, and expanding supplier networks are the most-deployed solutions. “Half of supply chain executives (51%) plan to hire seasonal or temporary workers to address peak season labor issues; 43% plan to increase labor retention efforts while 40% will ask existing workers to commit to overtime. Meanwhile, 49% plan to increase held inventory. Nearly the same number (47%) plan to grow supplier networks.”
Warehouse management systems (WMSs) and order management systems (OMSs) are top of mind for most supply chain executives. “Despite the majority (79%) believing that investing in a warehouse/order management system will improve peak season profitability, only 36% have made the investment. Well over half of (58%) respondents lack confidence in their systems’ ability to handle peak season requirements. Fifty-two percent (52%) are only somewhat confident. Another 5% are not very confident, and 1% aren’t confident at all.”
“The companies that will be successful in 2022 and beyond will be those that can merge planning and execution into a single cohesive practice,” said Justin Stone, senior vice president of customer success at Deposco in a statement. “While it may be too late in the year to implement large changes, like deploying new technology, there is still time for quick wins in peak season. Find and address the biggest operational bottlenecks in the areas of receiving, picking, packing, and shipping. Maybe choose just one or two of those things that you think provide the greatest impact and focus on those processes. …”
Additional information and details about the survey results are available in the full report.
The Container xChange Survey
The executives in the Deposco survey who predicted a “tough” peak season for 2022 weren’t alone. The results of a Container xChange survey released in May revealed similar sentiments—with 51% of freight forwarders, traders and shippers surveyed expecting “greater chaos” for this year’s peak season compared to 2021.
“The latest Container xChange survey titled 'xChange Industry Pulse Survey' found that this year's summer peak season cargo surge will be worse, exceeding the disruptions caused in the peak season of 2021,” according to the release. “26% predicted this year's peak season would be less chaotic than in 2021, while 22% expected the level of 'chaos' to be the same.”
And in line with the theme of an extended peak season, 37.5% of respondents said they were “ensuring clients received enough inventory by 'shipping early' in 2022.”
"Predicting exactly what will happen in this year's peak season is harder than normal because there are so many contradictory signs and intangibles," said Christian Roeloffs, co-Founder and CEO, of Container xChange in the statement. "In terms of the supply of cargo, we've seen that Chinese Covid-19 lockdowns have affected the availability of cargo for export to key markets in Europe and North America. One big question is whether China is going to sacrifice its zero Covid-19 policy to get trade and its economy moving again. …”
The release also referenced demand dynamics.
“The other side of this coin is demand, of course. Whether it is GDP forecasts, Purchasing Managers' Index (PMI) numbers, rising inflation or consumer confidence, multiple metrics suggest demand could be deflating. …”
project44’s 2022 Peak Season Consumer Survey
The recently released results of project44’s 2022 Peak Season Consumer Survey concur with what Container xChange predicted back in May: rising inflation will definitely have an impact on peak season this year.
The survey included nearly 1,500 consumers from the US, UK, France and Germany who shared their views regarding “spending, shipping, sustainability and more.” Results suggest that “85% of shopping will take place online, putting significant pressure on shippers and supply chains. However, consumers will prioritize savings over sustainability and on-time shipping.”
“Shoppers are feeling the pain of inflation and looking for ways to save money while still receiving purchases on time,” said Carson Krieg, Head of Industry Solutions + Strategy at project44 in a statement. “To win over shoppers, brands need to be armed with data and have a strong supply chain strategy prepared to address consumer concerns. Many retailers still have not developed and deployed a holiday shipping plan of action, and these brands are risking falling behind amid peak season.”
Key takeaways from the survey include:
Inflation and economic fears will have a massive impact on shopping decisions
“78% of consumers plan to spend at least 10% less this holiday season due to inflation.”
“The #1 concern for consumers is the prices of goods being too high, followed by shipping costs and out of stock items or low inventory.”
“78% of consumers are willing to compromise on the gifts they purchase for a better deal.”
Online and omnichannel brands will see the most traffic this holiday season
“56% of American shoppers plan to purchase at least half of their gifts online this year (compared to 43% in the UK, 29% in Germany and 25% in France).”
“One-fifth of consumers plan to do more than 75% of their holiday shopping online this year.”
“Less than half (48%) intend to do most of their shopping in stores.”
Shoppers would rather buy local than ship slow to reduce their carbon footprint
“56% of consumers would shop at local and small-owned businesses to reduce emissions.”
“But only one-third would elect for slower delivery or ship to a store for pickup to reduce their carbon footprint.”
“Only 16% of consumers say they’d pay more for a ‘greener’ brand this year.”
Overall, consumers are confident that shippers will deliver on time
“One-third of consumers are not confident their gift purchases will arrive in time for the holidays.”
“The glass half full view: two-thirds of consumers are confident their gifts will arrive on time.”
“64% of shoppers would not pay higher prices to guarantee that their purchases arrive in time for the holidays.”
Shopping plans were fairly consistent across the US, UK, France, and Germany, but a few differences are worth noting:
“While 67% of EU consumers say they prioritize brands with a commitment to sustainability, only 50% of US consumers claim to do the same.”
“French respondents had the most faith in shippers, with 94% confident that their gift purchases will arrive in time for the holidays.”
“At 53%, UK consumers are the most willing to pay higher prices to guarantee that their purchases arrive in time for the holidays.”
“49% of German respondents said they are willing to ship to a store for pickup to reduce their carbon footprint; no other surveyed nation comes close.”
To view the full survey results and report, visit project44.com.