Report: Get ready for a peak season ‘like no other’
Slower brick-and-mortar sales, a longer shopping season, and a second e-commerce surge are all on the table as retailers and supply chains ready for the holiday shopping season.
Victoria Kickham started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for DC Velocity.
The peak holiday shopping season is set to start early, last longer, and will be marked by a second e-commerce surge that will shatter previous records for online sales growth, according to research from commercial real estate giant CBRE, released Wednesday.
CBRE Research titled its 2020 U.S. Holiday Trends Guide “A Holiday Shopping Season Like No Other,” emphasizing the strength of consumer spending in driving the U.S. economic recovery but also pointing to the headwinds of global uncertainty and fears of a second surge of coronavirus infections. The report calls for holiday retail sales growth of less than 2% this year barring any pandemic-related retail lockdowns—a figure well below the 4.1% annual average increase since 2010. It also highlights four key trends that will shape this holiday shopping season, ranging from slower store sales to demands for balancing safety and the “holiday shopping experience” in physical retail stores.
First, the research points to slower brick-and-mortar sales, driven largely by the pandemic’s influence on the economy and reduced foot traffic in stores as shoppers choose to buy online. The decline will be offset by accelerating e-commerce growth, which the researchers say is set to reach unprecedented year-over-year growth of at least 40% in November and December.
Second, researchers point to a longer holiday shopping season, which will begin with Amazon’s Prime Day event and similar promotions from traditional retailers this month. Retailers will try to spread out demand to prevent overtaxing their supply chains and control crowds as consumers seek early deals, they said.
“[2020 will be] the longest holiday season we’ve seen,” Meghan Martindale, CBRE’s global head of retail sales, said in an online preview of the report Wednesday.
The third key trend is the e-commerce surge, which will follow the lockdown-related surge of this past spring. Martindale said the expected 40% increase in online sales this season “shatters previous records”—it’s more than double the record growth set last year—and will require careful preparation in order to manage inventory and control shipping and delivery costs. Her colleague, John Morris, added that the shift to e-commerce will eat into retailers’ margins and profitability simply because it’s more expensive to conduct e-commerce. It costs retailers more to deliver “a box to the door rather than a pallet to the store,” as one example, said Morris, CBRE’s executive managing director and industrial and logistics retail leader for the Americas.
The fourth trend that will shape this holiday season? “Reimagining” brick-and-mortar retail in the age of Covid-19. Retailers will need to get creative in order to address health and safety concerns while also maintaining the “festivity and excitement of the holiday season,” the researchers said. Strategies include maximizing “in-and-out” shopping, which means engaging shoppers with merchandise and sales associates in the store while pushing other activities out of the store. Vacant retail spaces, kiosks, common areas, and outdoor space on sidewalks and parking lots will be used for payment, to purchase gift cards, gift wrapping, and returns, limiting in-store activities. Such strategies will be especially important for smaller retailers that lack a solid e-commerce infrastructure, the researchers said. Martindale added that smaller retailers are likely to turn to third-party logistics services (3PL) providers for outsourced fulfillment and to manage other aspects of their omnichannel business strategies.
Longer term, Morris said he expects a continued transformation of physical retail space. Over the next 12 months, he said retail shopping malls will increasingly add logistics components to their operations, including fulfillment centers that are either adjacent to or integrated with existing facilities.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.