By Christophe Pecoraro, Managing Director at PFS Europe
While thoughts of Christmas may seem far off in the distance, for anyone operating in the retail space, discussions and preparations around peak season 2021 have already begun – or at least, they should have. Customers have been urged to start shopping much earlier this year amid recent warnings that a combination of domestic labour shortages and problems with the global supply chain could result in a shortage of popular gifts this Christmas. But the supply chain will not be the only challenge this peak. Preferences around how, where and when consumers like to shop have changed significantly over the last year and demands for personalisation and convenience continue to put brands under increased pressure to rise to the challenge more than ever. Peak 2021 won’t just be an opportunity for retailers to boost sales, it will be a chance to retain customer loyalty, and gain new interest by keeping up with these expectations. And, after a prolonged period of economic uncertainty and high street struggles, for many, it will be a make-or-break scenario.
Delivering despite disruption
Last year, Brexit uncertainty and coronavirus cast a shadow over peak season, but this year the true impact of these events has really come to the fore. In fact, retail bosses have warned the industry faces a shortfall of 90,000 lorry drivers as a “perfect storm” of Covid, and Brexit strangles supply chains. This, alongside a potential shortage in high street workers, could spell disaster for retailers trying to keep up with demand and deliver goods in time for Christmas.
Brands will need to monitor this situation closely and have more than one contingency plan to overcome these challenges and maintain resilience during peak. Multi-node fulfilment operations and temporary, pop-up or micro-fulfilment centres across various locations (including in-store) are just a couple of solutions brands should consider. These infrastructures enable brands to spread inventory and avoid further delays in the supply chain that may arise. Shortening the supply chain in this way can vastly reduce the transit time for goods, removing much of the uncertainty involved in last-mile delivery, minimising shipping delays and avoiding increased transportation costs.
Whichever option is selected, keeping up-to-date records covering where stock is located will be crucial to staying one step ahead. Last year a lack of visibility and supply issues meant 53% of retailers felt they had difficulty locating available inventory during peak. To overcome this, an advanced Distributed Order Management (DOM) system will ensure your order management system (OMS) can divert orders to the appropriate inventory pool – depending on several factors – including delivery address and product type. This will have a significant impact on your ability to keep orders moving to meet consumer demand.
Alongside these challenges, brands selling cross-border will also need to consider new changes to VAT charges that came into effect at the start of July. Now, all goods that move across EU borders will be subject to a new set of rules known as the “one-stop-shop” (OSS) registration, which will see a threshold of €10,000 applied to all EU-based businesses. As soon as this limit is crossed in a year, VAT will be charged at the destination country within the EU where customers are located, rather than the location of the goods at the point of purchase. This obligation, along with setting up the new OSS registration will be down to the retailer.
Keeping up with heightened expectations
If the impact on supply and ongoing Brexit complexities wasn’t enough to contend with, growing customer expectations will certainly keep retailers on their toes this peak season. Since the pandemic began, our relationship with the high street has changed significantly. During lockdown, 80% of consumers revealed they missed at least one aspect of the in-store shopping experience while shopping online. Meanwhile, (49%) missed the social aspect of shopping and deem it a leisure activity. This inevitably saw a rush of footfall as lockdown ended and consumers flocked towards the much-missed high street. Whilst Christmas was the major shopping season – now, any outing is special, and brands need to be aware of this when planning their marketing.
That’s not to say that online shopping will become redundant this peak. In fact, we are already starting to see the signs of high street novelty beginning to wane following a decline in retail sales just a month after reopening. This is further echoed by our findings that more than one-third (34%) of consumers expect to return to online shopping after the initial buzz has died down.
To be able to compete this peak season, brands must strike a balance between both online and offline worlds to give consumers the choice to shop in the way they feel most comfortable. Whilst there will be those demanding a fast one-click purchase online, there will also be those turning to the high street wanting to view, try on and test products before they purchase – and those that will be considering the sustainable aspect of retail also. In fact, more than one-third (37%) of Gen Z expect retailers to offer more of an in-store “experience” than they did before lockdown. This may include added-value offerings such as hosted events, catwalks, product launches, personalised makeovers, or even more quirky activities such as treasure hunts.
To bridge the gap between the online and offline realms, an omnichannel approach based on experimentalism is needed, with offerings such as buy online pick-up-in-store models (BOPIS) or buy online, ship-from-store acting as a key differentiator and competitive advantage for retailers who support them. Taking learnings from last year – retailers that pre-emptively invested in omnichannel capabilities fared much better during peak season 2020. In fact, two-thirds of retailers (67%) who invested in BOPIS initiatives reported an increased sales volume. Cementing this trend was curbside pickup, which led to the next strongest performance with 55% of retailers reporting increased sales.
A laser focus on customer satisfaction
Finally, while battling against the challenges associated with supply chain disruptions and the online/offline divide, customer satisfaction must remain at the epicentre of a brands peak strategy. Facilitating this will be a solid contact centre infrastructure to ensure customer loyalty beyond the Christmas season. After all, a customer isn’t just for Christmas. As well as providing real-time updates on where an order is in the delivery cycle, contact centre agents can enhance the customer experience by providing tailored recommendations and detailed purchase information. Personalised and sensitive interactions like this can make all the difference when it comes to lasting customer loyalty.
To handle this, outsourcing the customer care function can be a cost-effective and flexible option, as these teams can be scaled up and down to meet volume fluctuations throughout the year. During periods of unprecedented demand, increased volumes of orders inevitably lead to increased volumes of customers trying to get in touch with care teams, so brands need to make sure they are primed and ready to deal with queries effectively, and through a range of different communication channels.
It is safe to say we are in for yet another tough peak season – one that will push retailers to the very limit as they try to keep up with customer demand against a backdrop of challenge. We all know that famous saying ‘Fail to prepare, prepare to…’ and this couldn’t be truer than in this context. Last year just 50% of retail businesses felt they were adequately prepared for the recent peak season, and this resulted in over one-in-six (17%) missing out on critical sales.
Retailers must prepare now to not only navigate the challenges this peak season holds, but to ensure success in what has been a turbulent year for retail. Those who succeed during peak, can build upon this for a fruitful 2022.