What Prime Day Taught Us About the Supply Chain, Back to School, and the Holidays

Merchandise facility managers are having a hard time catching a break this year, dealing with labor shortages and a dearth of shipping containers and air freight capacity. All of that has caused major inventory backlogs for brick-and-mortar retailers. These ripple effects, of course, stem from the pandemic, which temporarily shut down factories and other production operations around the world that are the lifeblood of retail.

In June, we saw this reality in full force during Amazon Prime Day, the sales bonanza put on by the U.S.’s largest e-commerce player and piggybacked on by other major retailers such as Walmart, Kohl’s, Best Buy, and Target. In particular, small and midsized Amazon sellers that depend on internationally imported products were on edge as a result of global shipping problems. Furthermore, escalating shipping prices and scarce product inventory drove up costs, which made the deals less juicy compared to Prime Days of recent years.

Retailers of all sizes should learn from such early summer issues to get ready for Back to School and the holiday shopping season to maximize return on investment as vaccinated consumers go into stores again. Here are a couple of lessons from Amazon Prime Day.

Data Should Have the C-Suite’s Attention

If retail executives weren’t already keenly interested in-store operations data, they should be now. To maximize profits in the months ahead, they need to be laser-focused on using data to manage and predict costs. Whether it’s maximizing contractor value or documenting sanitation for compliance purposes, data should now be the defining factor in in-store management.

In addition, data intelligence can help the C-suite reel in greater profits by making their stores more cost efficient. To get the optimum profits out of Back To School and the holidays, multilocation brands can use this current situation — where everything is more expensive due to a clogged supply chain — as an opportunity to improve their ability to uncover operational costs via digitized, data-driven, and precise systems.

Typically, retail executives ask their store managers to find cost savings at the front of the building by cutting down on costs such as returned products. It’s time that executives look at back-office expenses with the same level of scrutiny instead of treating them like an afterthought. Are we overpaying our repairs contractor? Can we cut down on energy costs by eliminating wasteful practices? Does our HVAC really need to be serviced four times a year? Retail executives can get such questions answered with data and technology that turns up those hidden costs, helping their multilocation brand turn a greater profit in the months ahead.

Managers Must Plan Ahead

As we're seeing from summer's deal days, prices are going up, products are in short supply, and help is hard to find. Therefore, multilocation retailers need to secure parts, labor and contractors sooner rather than later.

Retailers must get ahead of planning rather than find themselves behind the eight-ball because the skilled contractor they need right now is booked up for the next three weeks. To avoid that scenario, executives should put out a memo with this call to action that will be seen by the CFO, head of real estate, facilities manager, and procurement director.

From a longer view, we learned from Prime Day that the global supply chain still hasn't recovered from COVID-19’s reverberations. And for the time being, product shortages and price hikes are going to cut into retailers’ profitability, and consumers will likely make fewer purchases due to everything from bicycles to boxes of chocolates being more expensive this year.

Last year’s back-to-school and holiday seasons were unusual because of the pandemic. While the rest of 2021 offers much more promise due to vaccinated consumers returning to normal activity, Prime Day taught us that retail executives need to lean into data and have their store leaders plan ahead to offset the overall impact of lingering issues in the supply chain.

Tom Buiocchi is the CEO of ServiceChannel, the leader in facility management software and contractor sourcing.