Embrace ‘Buy Early’ and Cancel ‘Black Friday’: Thomas Black
(Bloomberg Opinion) – A few decades ago, it was taboo to release holiday products before Thanksgiving. Retailers wanted to keep the focus on this huge shopping day after Americans gorged themselves on turkey — a giant sales bonanza they were counting on to turn their books from red ink to black. Hence the tradition of Black Friday.
The taboo has long been broken as stores release holiday products earlier and earlier every year; Costco Wholesale Corp. was selling artificial Christmas trees in stores in August. Now it’s generally accepted to release holiday products before Thanksgiving, and even Halloween is crowded out by Christmas decorations taking up shelf space.
This can be daunting for traditionalists, but it’s certainly a good thing for a tired supply chain. The more retailers can push consumers to buy early and dampen the surge in holiday shopping in December, the better the products will be. Holiday sales coming in October are winners for United Parcel Service Inc., FedEx Corp. and Amazon.com Inc., which increase their delivery capacity for six weeks each year to meet the increase in purchases. If demand is more balanced, the need for additional workers and warehouse space decreases. Retailers also wouldn’t have to hire as many temporary workers.
Last year gift buying surged as a parade of dire headlines warned that supply chain problems would leave store shelves bare and ruin the holidays. The supply chain, normally an obscure and hidden function of global trade, has become a household word as mounting port, rail, trucking and warehousing issues dominated the news this time of year. last. Retailers ran promotions early and people responded.
The result was that UPS and FedEx delivery volume jumped in October and November from a year earlier, then faltered in December. Overall, month-over-month retail sales fell 2.5% in December after rising 1.8% in October and 0.2% in November, Census data shows. Desk.
The buy-early campaign should be renewed this year to capitalize on the good habit of spreading e-commerce and in-store sales over two or three months instead of a shopping frenzy over a few weeks at the end of the year. To get an idea of the stress this short peak season puts on delivery businesses: UPS just announced plans to hire 100,000 temporary workers for this holiday rush, like it has for the past two years.
Strong e-commerce demand during the pandemic, especially for holidays, has allowed UPS and FedEx to increase delivery prices by more than 20% since 2019. Both couriers have limited the volume of packages they are taking from big retailers, leaving retailers looking for alternatives to deliver their e-commerce wares. Startup gig delivery companies, such as AxleHire and Veho, have sprung up to meet the need. Even food delivery companies like DoorDash have gotten into parcel service. If more of these deliveries were made in November and October, retailers would not be at such a disadvantage in December.
The convenience of e-commerce has taken hold, so we will still see growth in parcel delivery during the traditional peak season, even as more people shake off the pandemic and return to stores. But it will be a more normal pace, says Marc Gorlin, who founded and still operates same-day delivery company Roadie, acquired by UPS last year.
Retailers will be motivated to adopt holiday discounts early because consumer budgets are squeezed by inflation, Gorlin said in an interview. Retailers are also keen to release goods to reduce bloated inventory.
Retailers got a head start on importing goods this year. Retail imports, as measured by shipping containers, were up more than 5% in the first six months of 2022 compared to the first half of 2021, according to the National Retail Federation. In July, retail containers fell from a year ago, marking only the third decline in two years as consumers spent heavily during the pandemic. The volume is expected to fall 3.2% in the second half of 2022, the federation said.
This should bring further relief to the supply chain, which is certainly working better now than last year, but has lingering issues. Warehouses are crammed with goods and often lack workers to quickly unload truck trailers. The railways are plagued with poor service, which hinders the movement of shipping containers and can cause congestion at ports.
This year’s port congestion has migrated eastward, hitting Savannah, Georgia particularly hard as shippers divert freight from the West Coast over fears of a possible dock workers’ strike over contract negotiations. A railway strike is even more threatening if unions fail to reach a contract agreement with more than 30 railways by September 16. Either of these events would ruin the vacation.
Whether it’s staying ahead of the competition on holiday discounts, reducing inventory, or controlling package delivery expenses, it makes sense that the holiday shopping season starts now. Next year too. It’s set to become the new tradition, replacing the news frenzy about crazy shoppers vying for big-screen TVs at a discount store the day after Thanksgiving. Black Friday and even the latest release, Cyber Monday, have run their course. The mass of December sales must be definitively smoothed out.
Let the discount begin.
To contact the author of this story:
Thomas Black at [email protected]
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