How the Covid-19 Pandemic Will Impact the Holiday Buying Season
Traditionally, Thanksgiving weekend signals the beginning of the U.S. holiday shopping season, with big chain stores opening late on Thanksgiving night or early on Black Friday, and crowds of shoppers lining up to take advantage of doorbuster deals.
However, this year -- like almost everything in 2020 -- holiday gift buying will be different because of Covid-19. We spoke to three logistics experts at Georgia Tech’s No. 1-ranked H. Milton Stewart School of Industrial and Systems Engineering who forecasted how the pandemic may impact consumer purchasing in November and December.
1. The Black Friday shopping weekend already looks different.
Retailers are responding to the impact of the pandemic by announcing that stores will be closed or have significantly reduced capacity on Black Friday weekend. Some retailers began offering Black Friday deals immediately after Halloween, which will stretch the seasonal shopping calendar.
“Because the Covid-19 pandemic is limiting retailers’ resources, these companies are offering a longer sale period as a way of mitigating peak demand for seasonal employees,” explains Benoit Montreuil, who studies smart, hyperconnected, and sustainable supply chains.
2. Store shelves may be empty.
For many Americans, the erratic availability of toilet paper, paper towels, and cleaning products earlier this spring remains an all-too-fresh memory. With supply chains for consumer goods from Asia still shaky, buyers may find in-demand gift items are hard – if not impossible – to find on store shelves. But availability may be variable.
“The big chains like Target and Walmart, and of course e-commerce giants like Amazon, will have greater access to important product suppliers when compared to smaller retailers and local stores,” says Alan Erera, an expert in transportation and logistics systems planning and control. “They will be less likely to have shortages of popular items.”
3. Online shopping will continue to grow exponentially.
“Because of the pandemic, e-commerce in the U.S. grew from 15% market penetration to 35% this spring,” notes Chip White, who researches supply chain productivity and risk mitigation, citing a McKinsey & Co. analysis. “That’s 10 years’ worth of growth in three months.”
With Covid-19 cases surging again around the country, e-commerce remains a key way for consumers to get what they need. Holiday shopping will put further pressure on supply chains and delivery systems.
"Last-mile deliveries will increase dramatically as a result of increased e-commerce penetration during the holidays," White says.
4. Last-mile delivery may be challenging.
The “last mile” represents shippers getting packages from a delivery hub into the hands of the consumer, and this is a significant stress point in the supply chain. Delivery companies traditionally hire seasonal workers to deal with the increased delivery volume during the holiday shopping season. With demand at an all-time high, these companies are already directly competing with one another to employ additional workers.
Amazon is the behemoth to beat in all of this. In March, the company hired 175,000 new workers to help manage the surging demand in e-commerce. They have since announced that they will permanently retain 70% of those new employees and hire an additional 100,000 seasonal workers. This will help solve the company’s own last-mile delivery challenges, but every worker employed by Amazon means one less person available to UPS, FedEx, and USPS for their last-mile deliveries.
“The 2020 holiday season will set the stage for retailers adapting to the rapidly approaching ‘new normal,’” says Montreuil. “Last-mile delivery, especially in dense metropolitan areas, is under considerable pressure to become more efficient, reliable, and convenient. Cities and retailers will have to get smart at incentivizing delivery service providers and citizens to share delivery assets and consolidate flows – and to avoid city-wide situations where there are multiple, nearly empty delivery trucks on the same street at the same time.”
5. Delivery times could be delayed.
Given the aforementioned item scarcity and last-mile delivery issues, consumers should not rely on projected delivery dates for the goods they purchase online.
“There will inevitably be issues with getting purchases delivered in a timely fashion for the holidays,” explains Montreuil. “Don’t believe the delivery schedule a retailer gives you. Nothing is guaranteed until the purchase is physically placed on your doorstep or in your mailbox.”
6. Begin your holiday gift buying sooner rather than later.
Given all of the uncertainty around holiday buying, what’s the best approach for shoppers?
“Start shopping – right now,” advises Erera. “Don’t wait until Black Friday. If consumers start buying holiday items sooner rather than later, they are more likely to find what they’re looking for and to avoid shipping delays that may result from pressures on last-mile delivery capacity.”
“And by starting early, it’s more likely that shoppers will have their items delivered and in hand before the celebrations where gifts will be exchanged,” Montreuil says. “Retailers and their supply and logistic partners indeed face enormous uncertainty in demand, in delivery capacity, and in product availability. These companies must be agile, smart, and proactive to make most deliveries successful -- and this is a huge challenge.”
The key to gift buying this year, as with so many other pandemic-related challenges, is to be flexible and kind: Almost everyone will be feeling these impacts. Have backup ideas for gifts you want to give. And – while this goes without saying by now – if shoppers do venture into stores in search of the perfect present, they should wear face coverings.
“That protects everyone,” adds White.
Alan Erera is UPS Professor of Logistics and co-executive director of the Georgia Tech Panama Logistics Innovation & Research Center. Benoit Montreuil is Coca-Cola Material Handling & Distribution Chair and Professor and Director of the Supply Chain & Logistics Institute, the world’s largest logistics institute. Chip White is Schneider National Chair in Transportation and Logistics and professor. All three are faculty members of Georgia Tech’s H. Milton Stewart School of Industrial and Systems Engineering.
Visit Unprecedented Holidays for more holiday season insights from Georgia Tech researchers.