Store rate

Peak season: meeting holiday demands amid tight supply chain

Many shippers and manufacturers have started to work a little better on their supply chains to get inventory to the United States sooner, as planning for peak season is already well underway.

Retailers may be looking to strike big closing deals soon on seasonal products that have been over-ordered due to concerns about supply chain delays.

Retailers will have discounts, but it will be interesting to see how far the discounts go this year, given that inflation, materials and labor costs are on the rise. Overall raw materials in many sectors have increased, so their production costs have also increased.

It’s a bit of a mixed bag in terms of how much they can offer at a discount and how big they will be. It may be about the same in percentage terms, but the overall price could still be higher compared to previous years, taking into account inflation.

We will start to see sales that entice consumers to buy now, as opposed to a single day sale or long discounts on certain products or extended sales. We are likely to see shorter lead times which encourage consumers to buy much faster instead of waiting for multiple offers to come their way.

Retailers may want to start freeing up inventory space by starting to offer discounts sooner to try and get some of these things moving. Knowing that peak shipping rates are going to be more expensive, if retailers can push product forward while offering better discount and paying less shipping and freeing up storage, that will certainly to their advantage.

We are starting to see the high season supplement start to expand in terms of timing. But we also see varying rates depending on when it falls during that season.

COVID fears in China

China’s zero-COVID policy still remains in effect, and it runs the risk of possible shutdowns — particularly if a new variant or a large outbreak occurs as we head into the winter months. These shutdowns are expected to occur within four to six weeks to have a massive impact this holiday season, as most products will begin shipping within the next month.

Concerns for consumers

While many are paying attention to the constraints within the electronics and automotive industries due to the shortage of semiconductors, a more serious crisis is looming around food shortages. Food supply chains are hit hard by climate events like the recent heat waves.

There are also lingering concerns about wheat in general this year due to the war in Ukraine. At present, the focus is more on food supply and less on everyday household goods.

Consumers should start actively looking a bit more to find options or alternatives that might give them shipping flexibility as constraints might arise. Shipping rates will increase during peak season, especially packages with FedEx, UPS, and USPS listings. To avoid some of these rate increases, they are ultimately passed on to consumers.

Spencer Shute is a senior consultant at Nearby, a strategic team of supply chain and procurement specialists based in Chicago and London.