Which consumer is showing up for America’s first “post-pandemic” holiday season?
By some measures, e-commerce volumes are declining and consumers are pulling back due to inflation as the holiday shopping season begins. And the predictions are mixed. Ship Matrix said this year’s holiday season will be defined by “massive overcapacity” for logistics giants like UPS, FedEx and Amazon. But the National Retail Federation is forecasting record sales for the first weekend of Christmas shopping starting on Black Friday on Wednesday, expecting eight million more shoppers (166 million) this year than last year, and the highest level since 2017.
Some retailers see resilient consumers boosting their sales, even in times of inflation and recession. Best Buy reported third-quarter results that beat Wall Street expectations and said it expects holiday spending to more closely resemble historical holiday periods, with shopper shopping activity centered on Black Friday week, Cyber Monday and the two weeks prior to December 25.
But the consumer picture is far from uniform. Target’s sales fell by half in the third quarter and many retailers are facing a tough environment as they deal with inventory issues, though these high levels of inventory appear to be abating. Abercrombie & Fitch said this week it is “cautiously optimistic” about holiday sales, but many retailers still expect a lot of promotions to entice customers to spend more, or as the CEO of American Eagle Outfitters said on his earnings call this week: “a very promotional holidays.”
For the first time since the onset of Covid, more shoppers are returning to the in-person shopping experience, and e-commerce volumes are likely to come under pressure. Ship Matrix’s forecast of 90 million packages per day would not represent year-over-year growth. That means the increased capacity built into the logistics network, from UPS to FedEx, Amazon and the US Postal Service, can go unused for as much as 20%.
Whatever the picture of holiday shopping turns out to be, FedEx Ground and UPS executives say they are ready for a holiday spike and to adjust activity as demand trends become apparent. UPS is expecting 100,000 seasonal workers in December with package volumes expected to peak later in December. FedEx recently told TBEN it is ready for the holiday season, even after major cost cuts it implemented this fall, which the company attributed to a major drop in global consumer demand, and even with fewer seasonal workers being hired this year. At the UPS Smart Hub outside of Atlanta, the logistics company is already experiencing holiday-like levels.
Watch the video above to learn more about how logistics giants are preparing to continue a recent streak of on-time deliveries this holiday season with reporting from TBEN’s Frank Holland.