Retail Holiday Sales 2018: View From the C-Suite
By Jim Tompkins
CEO Tompkins International & MonarchFx
I have already seen projections, predictions, and political oriented statements about Holiday 2018 for both online and in-store sales for the U.S.
My view of these statements is:
- Projections: trying to predict the future based on the past is a waste of time.
- Predictions: trying to predict the future based on customer surveys is folly.
- Political Oriented Statements: Political hacks trying to use the cover of holiday forecasts to beat their drum on taxes, tariffs, inflation, Federal Reserve monetary policy, retail apocalypse, trade wars, etc. are without value.
My approach is very different. I have spoken to many C-level executives, based on these conversations below are my top 10 Ah-Ha’s for Holiday 2018:
1. The economy, consumer confidence, unemployment, stock market, corporate profits, and virtually all macro factors are all very positive and all signs point to an awesome Holiday 2018.
2. The early Thanksgiving and Chanukah, early start to Black Friday sales will stretch the selling season and require retailers to do a better job of promotion planning for their unified store and online (Unichannel) execution.
3. Major inventory problems will occur throughout Holiday 2018. Stories of inventory shortages by channel, location, and availability will be frequent, as will major mark downs starting around mid-December. Companies will grasp the need for advanced tools to forecast merchandise volumes and for allocating the inventory based on a smart flow of inventory through a distributed inventory ecosystem. The impact of poor inventory planning will be a huge revelation for Holiday 2018.
4. Attempts to guess the level of promotions are totally crazy, as are attempts to guess the impact of weather (to include Hurricane Florence and Hurricane Matthew), or the mid-term elections on Holiday 2018. These factors are only used by firms making excuses for doing a poor job.
5. The supply chain will continue to grow in importance both from a customer experience perspective and from a revenue growth perspective. A slow delivery promise for online orders will be an important reason for missing projections. Problems in meeting holiday shipping promises will be a major topic of discussion.
6. The analysis of shopper demographics is for the most part a waste of time. The facts are that both men and women, old and young, like the excitement of shopping in-store and the convenience of online. It is very clear that Unichannel is the key. The only sure solution is to have great in-store experiences and great online convenience, supported by a unified high-performance supply chain.
7. Giving customers choices is a big deal (buy online pickup in store, buy in-store, deliver to home, buy online, same day delivery, next day delivery, two-day delivery, three-day delivery, etc.) along with free shipping and returns.
8. Labor shortages and robotic solutions will be in the news. As companies try to hire over one million temporary holiday workers to staff their stores, their fulfillment centers, and their delivery drivers, they will find a shortage of qualified applicants. The cost of temporary workers will continue to rise, and more and more companies will wish they had entertained robotic solutions and/or automated distributed logistics solutions like MonarchFx.
9. Fulfillment center capacity offering automated picking, packing, and shipping is in short supply. These shortages are forcing many online retailers to utilize inadequate high cost manual operations, providing low customer satisfaction. This challenge is further exasperated by retailers and wholesalers being asked to do store replenishment in “Each” quantities as opposed to “Cases”. With the huge growth of online shopping there simply is not enough capacity to handle the volume.
10. I believe retail sales for Holiday 2018, excluding automobiles, gas, and restaurants, will be up by 6%. This is considerably higher than what most are forecasting, but we see it in-line with the economy, year-to-date, and consumer confidence. I disagree with the estimates being put forth by the National Retail Federation but see their 4.3% to 4.8% forecast consistent with their under promise and over deliver perspective. I also believe eCommerce for Holiday 2018 will grow by 25% over eCommerce 2017. Therefore, what I find most interesting is 66% of this year’s growth is due to online growth and only 34% of the growth came from in-store. My overall growth retail forecast for 2018, consists of a 25% growth in online sales and only a 2% growth in-store, continuing the trend we have seen over the last five years.
Hopefully you are forewarned on the above and have a very happy holiday season.
- Video: Tompkins Robotics
- White Paper: Achieving Revenue Gains from Distributed Logistics