Who will purchase goods during the first Holiday season in America “post-pandemic”?
As the holiday shopping season gets underway, certain indicators show that e-commerce sales are decreasing and customers are cutting back because of inflation. The predictions are also conflicting. According to ShipMatrix, this year’s holiday shipping season will be characterized by “massive overcapacity” for logistics behemoths like UPS, FedEx, and Amazon. However, the National Retail Federation prediction released on Wednesday expects record sales for the first holiday shopping weekend, which begins on Black Friday, with eight million more customers (166 million) expected this year than last, and the highest level since 2017.
Even with inflation and the possibility of a recession, some shops are benefiting from a resilient customer who drives up sales. Best Buy stated that it expected holiday spending to be more in line with previous holiday seasons, with a focus on Black Friday week, Cyber Monday, and the two weeks preceding December 25. The company also revealed third-quarter earnings that were above Wall Street’s forecasts.
The consumer image, on the other hand, is far from uniform. Target’s sales plummeted by half in the third quarter, and many retailers are battling a difficult climate while coping with inventory difficulties, albeit these excessive levels of stock appear to be easing. Abercrombie & Fitch stated this week that it is “cautiously optimistic” about holiday sales, but many retailers still anticipate providing a lot of incentives to tempt customers to spend more, or, as American Eagle Outfitters’ CEO remarked at its results conference this week, “a highly promotional holiday season.”
Since the beginning of Covid, more customers are returning to the in-person shopping experience, and it is expected that e-commerce volumes will be under pressure. ShipMatrix’s projection of 90 million parcels per day represents no year-over-year increase. That means that the enhanced capacity put into the logistics network, from UPS to FedEx, Amazon, and the US Postal Service, might be as much as 20% underutilized.
Regardless of how the holiday shopping picture develops, FedEx Ground and UPS officials say they are prepared for a holiday spike and will alter operations as demand trends emerge. UPS is employing 100,000 seasonal workers in anticipation of a peak in shipment volumes later this December. FedEx recently told CNBC that despite significant cost reductions made last autumn, which the business ascribed to a sharp downturn in consumer demand throughout the world, and despite hiring fewer seasonal workers this year, it is still prepared for the holiday season. The logistics business is already witnessing holiday-like levels at its UPS Smart Hub west of Atlanta.