Holiday Shopping 2020 Postmortem: 5 Key Lessons Learned
The 2020 holiday season wreaked havoc on businesses across the retail industry, from manufacturers and consumer brands to logistics, transportation and warehouse providers. Brick-and-mortar retailers went from planning "doorbusters" to managing new lockdowns to scrambling to create fulfillment stores in a matter of weeks. Seasonal delivery deadlines were moved up to meet the realities of inventory and shipping amid a pandemic-fueled online holiday shopping spree. While logistics companies and carriers padded their seasonal workforces, added surcharges on shipments, and enforced capacity limits to try and manage demand, shipping delays, supply issues and capacity nightmares still unfolded.
The 2020 holiday shopping season — arguably one of the most challenging retail seasons ever — has come to a close. And while we would all like to put 2020 behind us, much of the disruption the retail world experienced has triggered lasting industry change. For leaders across the retail landscape, reflecting on key learnings today will be critical to building success in the future.
What We Need to Heed From Holiday 2020
As much as we used the word “unprecedented,” 2020 wasn't entirely unique. From shifting consumer behavior and the rise of e-commerce, to the transformation of traditional promotion-driven events and the realities of seasonal flex capacity, while the scope and scale of the challenges were new, 2020 exposed cracks in the foundation that had been growing over time, accelerating a necessary wake-up call for the retail industry at large. So, how can retail leaders take stock of the current environment and transform disruption into forward-looking change?
Here are five lessons we can take away from 2020 in order to build a more resilient, shock-resistant retail industry in the future:
- Always have a plan B. Being prepared to adapt is clearly imperative to thriving in a changing environment. Who would have predicted, for instance, that leading logistics providers would place shipping limits on major global retailers? Building models that address nuanced scenarios will help ensure industry leaders are asking the right questions in order to build resilience and agility into their networks, planning processes and systems. Do you have the ability to absorb swings in demand or supply? Can you quickly move inventory from your brick-and-mortar channel to e-commerce? As you model a myriad of scenarios, reconcile gaps or potential pain points by leveraging external data signals to make more precise predictions. Then be ready to act on those scenarios in order to manage disruption with confidence.
- Prioritize omnichannel, and staff accordingly. Sudden and localized restrictions were especially problematic for retailers that prioritized in-store shoppers, and it’s no small feat to set up things like curbside pickup or buy online, pick up in-store (BOPIS), especially if you aren’t staffed appropriately. Retailers that succeeded in 2020 had already built out systems to generate a consolidated view of inventory across warehouses and stores, and had prioritized workforce planning to ensure both warehouses and stores were staffed accordingly. This allowed for easy fulfillment of orders, regardless of where the order was placed or where the customer wanted it delivered. 2020 proved that retailers need to embrace an omnichannel approach, but beyond that, they need to have systems in place to capture real-time data across channels and ensure their workforce is set-up to support sudden shifts in demand and capacity.
- Adapt pricing and promotion strategies. In the past, retail was calendar driven with merchants all vying for the same “share of wallet” around the few big buying seasons each year. However, 2020 revealed that consumer buying behavior isn't necessarily linked to traditional promotion periods. Instead, retailers should leverage real-time data, external buying signals and scenario planning capabilities to adapt their pricing and promotion strategies based on the behaviors they're trying to drive. Are you trying to drive store traffic? Move excess inventory? Incentivize earlier purchases or slower shipping options? Model, test, execute and analyze the results of targeted pricing and promotion strategies to drive the right buying behaviors for your business.
- Get creative to maintain service levels. Think outside the box to manage peaks and make it easier for customers to interact with your brand, especially during the busy holiday season. For instance, many retailers started their Black Friday deals early in November to help maintain service levels. You can mitigate potential inventory and logistics nightmares around big seasonal promotions by offering pre-holiday discounts or creative incentives, like personalized, early-holiday pickup windows for gifts purchased before November.
- Don’t make any implicit assumptions. We always assumed that there would be enough ocean and airfreight slots in the logistics industry to meet shipping demand, but 2020 turned the logistics and freight landscape upside down. For example, a lot of freight moves on passenger aircraft, so when travel dropped off and the airline industry was forced to drastically reduce flights, airfreight slots became increasingly limited. If you learn one thing from the recent holiday season, let it be that our assumptions are never guarantees. Plan for as many nuanced scenarios as you can and be ready to adapt those assumptions to fit the current landscape.
What Comes Next
It would be a mistake to see 2020 as a blip, or a singular black swan event without far-reaching ramifications. More likely, it's the tipping point for continued change and disruption across the industry.
However, with change comes the opportunity for new ideas. And as 2020 revealed, the retail industry could benefit greatly from innovation. In fact, a recent survey by McKinsey and Company found that 71 percent of retail executives agree that changes brought about by COVID-19 will be one of the biggest opportunities for growth in the industry. Instead of looking to cover up the cracks last year exposed, we should take this opportunity to reimagine, rethink and reinvigorate the industry. Leverage the insights collected during the recent holiday season to ask complex questions, test new ideas, and develop innovative strategies that will drive your business and the industry forward.
After a year like 2020, it may seem strange to say, but what better time than the present?
Related story: NRF: 2020 Holiday Retail Sales Grew 8.3%