How the digital-first shopping season is impacting the warehouse industry
Much of the coverage of the impact of coronavirus on retail has focused on how this has negatively affected the high street. However, crucially, the restrictions and lockdowns have actually had a very positive impact on the digital-first economy. Consumers have increasingly gone online to buy everything, from weekly groceries through to one off purchases. Many retailers have begun to embrace digital selling with even more gusto – some for the first time – and this has had a knock on impact on the warehouse industry. So, what does the digital-first shopping season look like in the run up to Christmas and how is the warehouse industry likely to feel the impact?
Moving selling online
More than two thirds of merchants responding to one survey indicated that they had adjusted their selling strategy in response to the pandemic and 35% launched an online store for the first time. This has required a readjustment in supply chains and logistics spaces to accommodate the increased focus on digital-first as well as a rise in the volume of orders. That rise has been significant – 56% of merchants experienced an increase in customer numbers over the previous six months. This has had a knock on impact on the way that merchants have operated, with new products being ordered and new sales channels established. For consumers, the digital economy has become a place to explore more with more than half of those who responded to a survey indicating that they have bought from a retailer this year that they didn’t have a previous relationship with .
Changes to fulfilment patterns
One of the major trends resulting from the structural changes introduced in response to COVID-19 has been a move away from traditional sales channels and towards direct-to-consumer selling online. New selling strategies have had to take this into account, as well as the fact that consumers are still looking to buy from the retailers that are able to provide the fastest and most reliable shipping rates. Many legacy supply chain structures were not able to adjust quickly enough to the new normal and as a result struggled with being able to meet delivery expectations and keep warehouses running efficiently. Fulfillment patterns have had to be adjusted to take into account the changes to selling approaches, for example by integrating no contact delivery, shipping directly to consumers for the first time and offering shipping guarantees, and this has had a big impact on the warehouse industry and what it is expected to provide.
The warehousing industry is operating at peak levels
Fulfilment centres and warehouses across the UK are already tightly stretched trying to accommodate not just the significant uplift in demand but also the new approach to fulfilment. Despite the fact that many are already at capacity there is still likely to be an increase in digital purchasing in the run up to christmas. In fact some retailers believe that this will surpass the figures for 2019 and this is going to create another set of supply chain challenges.
With digital-first shopping thriving and the festive season virtually upon us the need for more flexible supply chains is putting increasing pressure on the warehousing industry.