Are consumers still hesitant or not? Different numbers and signs conflict with each other. So it is difficult to predict how things will go in the upcoming peak season in terms of logistics. The answer: flexibility.
The inflation rate in our country has been declining for some time, and the economy in Europe seems to be improving as well. But out research McKinsey shows that we tend not to change our purchasing behavior immediately. Eight out of ten European consumers say they are taking action to ease ongoing pressure on their household income. It will be interesting to see how this affects the year-end period. All those holidays and other deal celebrations traditionally make up the peak season for the logistics sector, but will that also be the case this year?
The latest figures show that inflation is still falling, but in the short term it looks like this will have little impact on our purchasing behaviour. And the few people who realize this don’t suddenly start spending more. The fear of not making ends meet, which arises in times of high inflation, is likely to overpower the desire to buy new and beautiful things. This trend will continue even if inflation falls again.
Peak season? Which peak season?
Spending less and less money for Christmas gifts: does this mean the logistics sector is heading towards a weak peak season? After a rush of packages during the pandemic pridect Seko Logistics says this year will be different. The peak season will start later and the peaks will be lower. bee Kuhne + Nagel One does not even expect a high season at all, because the year-end rush for this sector usually begins in the middle of summer.
However, other events prove that today’s consumers are vulnerable to additional – and perhaps ill-considered – promotions and expenses. Amazon Prime Day is a good example of this. Amazon’s major annual promotion took place on July 11 and 12, with thousands of discounted products. The aforementioned caution among consumers appears to apply less this weekend, with Amazon sales growing by at least forty percent in Europe and eighty percent in the United States. This is no small feat, as it turned out, because Amazon Prime Day was chosen as the biggest sales day in the company’s history. Given the end of this year, this seems to be a harbinger of a busy Black Friday, the festival of deals that has also become a staple for retailers in recent years.
Flexibility is essential
But what can the logistics sector expect this year? The only thing for sure is that no one really knows, but everyone should prepare for it. Making agreements with suppliers regarding waiting times may be necessary to serve customers as quickly as possible and to meet increased demand. It is also necessary to take measures related to inventory and warehouse management so that you can handle large fluctuations in orders. Now that there is so much uncertainty – will there be a peak season or not? – Scalability and flexibility are more important than ever. Automated warehouses, in which robots remove goods from shelves and prepare them for shipping, certainly provide these advantages. Working a little longer during busy times or even preparing orders 24/7 is not a problem for them. But sometimes this is not enough to handle the parcel rush. For maximum flexibility, it can sometimes be helpful to add additional racks, robots or sorting stations to your existing installation. This way, even in the event of an unexpected stampede, you won’t encounter any surprises.
Will the peak season remain quiet, or have consumers saved their money to spend more before the end of the year? Parcel season starts from mid-November. The forecasts for a moderate peak season and the success of Prime Day are clearly at odds with each other. Preparing for different scenarios is essential to deal with larger than expected peaks.
About the author: Jan Hejblom is a senior sales executive at Exotic.
