The holiday season is upon us, with consumers all over the world frantically getting organised, going over their wish lists and checking out their favourite retailers in an attempt to beat the rush — wishful thinking, as most people usually still end up rushed anyway. However, what consumers may not be aware of how this is the way their holiday season could be disrupted. From simple things such as their favourite food products not being available, to increased costs of their gifts and delays to their orders. There's no busier season for supply chains than the holiday season; year in, and year out, trends have remained steady. 2023 seems to be the outlier, though. "Supply chain leaders at retailers in both the US and UK are expecting up to 30% of revenue losses this holiday season as they prepare for another wave of supply chain disruptions and reduced consumer spending," reports Procurement Magazine. But what does this mean?
What curveballs can we expect during the Christmas period and how will it affect the supply chain?
Online shopping and surcharges impacting holiday season supply chains
The shopping experience has changed in the last few years. Brick and mortar have been exchanged with online shopping, with the shopping experience expanding from “just” e-commerce websites to other digital channels. A report by McKinsey indicated that online shopping for beauty products has dramatically increased between 2015 and 2022, with data indicating a continued increase, and in South Africa, Black Friday was reported to have more online sales than in-store sales. This increased pressure on retailers has led to the need to plan better, use customer buying trends to predict shopping patterns and keep an eye on market changes in case of any disruptions. All these tasks can be overwhelming even more so during the December holiday season.
Increased reliance on online shopping and the demand for immediate delivery means that businesses need to anticipate the last-minute rush, handle an increase in production and inventory, and look out for any delivery concerns that may arise. Delays in any delivery are expected due to transportation challenges, such as increased volume of shipments and weather anomalies. According to a study done by Coupa, retailers are expected to face inventory issues due to delayed delivery and will be leaning towards "just-in-case" inventories.
Holiday season supply chains impacting the sweeter side?
When thinking about Christmas and the holidays, the images of sweets and all the delicious treats associated with them immediately come to mind. It’s the season to indulge and usually, this is a part of the holiday experience that people rely on. This year, however, a global sugar shortage has thrown suppliers, retailers, and consumers into a fray of confusion. According to Fox Weather, a deficit of 5.4 million metric tons of sugar this season is expected to have a ripple effect on global consumption during the holidays impacting shopping, cooking and even the steady supply of multiple products, not just candy. According to the article, this domino effect of the sugar supply will impact dairy products such as flavoured milk, yoghurts and, ice creams as well as beverages such as energy drinks and alcohol.
The jury is still out on this one, with a few saying that there is no need to worry yet. Others have reported the need for planning and expecting the worst. In a large part of the world, specifically Asia and Africa, rice is a daily staple and even more popular during the holiday season. Concern about the global rice shortage began when India banned various rice exports causing a ripple effect. The International Food Policy Research Institute has said that "India's decision to ban exports of non-basmati rice varieties creates a new vulnerability in commodities markets that threatens already tenuous global food security." The rice market is under heavy scrutiny right now, as the threat of El Nino looming heavily in certain parts of the world, and other countries following India in their decision-making. It has been reported that other countries are also limiting their exports to keep their domestic stock steady such as the United Arab Emirates, and with climate change at ever rise, the Financial Times has reported concerns over climate change and weather anomalies like El Nino and the impact it will have on rice production. With the holiday season in full swing, retailers and suppliers are bracing themselves for the shopping rush to increase and delivery to fall short.
Dabbing the holiday season supply chain with a dash of olive oil
Low production, high prices, and higher demand are just a few of the things affecting the olive oil supply chain. The 42% increase in the price of extra virgin olive oil is causing distress globally and reducing consumption. Consumers globally are already facing rising inflation and a reduced supply of usually available products, and now olive oil has joined the fray.
The olive oil crisis started in Europe due to dry weather affecting the harvest. According to data, the decline in production has affected Greece, Turkey and Spain. Concern over price hikes has been a topic of conversation with brands like Graza "increased its prices from $15 to $16 a bottle due to having to pay more than double the amount it was for olive oil imports since it started doing business in early 2022," according to ModernRetail. Businesses like Graza are also employing tactics to deal with the issue of production such as finding new sources of supply.
During the holiday period in 2022, retailers leaned towards heavy discounts and strategic offers before the holiday season to prepare for better sales and more customers. According to news outlets, this trend will likely continue this year. The Amazon Prime Day and global Black Friday sales happened before December, with consumers preparing for Christmas shopping earlier than usual, taking advantage of the deals and attempting to avoid the rush. Unlike most years, hesitation while shopping was observed, with customers looking for more value for money deals and others choosing to wait for other big sales days to make purchases. "Consumers are navigating the holiday season well and taking advantage of holiday promotions, giving them ample choice as they hunt for gifts for everyone on their list," reported Reuters. What does this mean for retailers? A continued reliance on discounts, less inventory, and better deals to clear remaining stock. Retailers have observed the tumultuous pattern of trending products, it has become harder to predict how long items will be of interest to shoppers, whether this will guarantee steady income or if the trend will fizzle out leaving dead stock. This showcases a need for some cautiousness, better planning and a smaller inventory which relies on efficient supply and delivery should anything change at the last minute.
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