Will Cost-Effective Options Win Over Rapid Delivery?

As the holiday season nears, retailers are gearing up to be prepared for the numerous challenges it brings along. Inventory, promotional strategies, and budget constraints are a few of the top concerns retailers face as they lay the groundwork for the busiest time of the year. 

As per research by Manhattan Associates, 87.2% of retailers have measures in place to ensure trending products are available during peak shopping periods, but 38.8% still cite having enough inventory as their biggest concern. Further, 62.4% of supply chain leaders worry about inventory shortages, while nearly 70% view economic shifts as a larger threat than geopolitical instability or infrastructure issues.

The 2024 Supply Chain Confidence Survey by Manhattan Associates reveals consumer worries over the inflated cost of gifts and the retail industry’s corresponding moves. 

Inflation Continues To Be A Cause of Concern 

93% of consumers say price increases over the past few years have had a moderate or strong negative impact on them. Over two-thirds (67.8%) of consumers think that the rate of inflation is getting worse. 70.4% of retail leaders anticipate that holiday costs in 2024 will be higher than in previous years, driven by inflation and rising shipping costs.

Consumers are adjusting their holiday spending: 60% plan to buy fewer gifts, while 57% will seek less expensive options, and 52.2% will look (and are willing to wait) for sales and deals. Additionally, 74.6% of consumers expect to pay more for their holiday shopping this year compared to last year.

To mitigate the impact of inflation, nearly 70% of retailers said they will offer increased sales and discounts, 56% will offer discounts via their loyalty programs, and 34% will offer flexible payment options.

Impact On Consumers 

The research revealed that 64.1% of consumers will reduce the amount they spend while shopping for non-essential goods. 61.3% of consumers have not been able to save money as they had planned, and 61.3% of consumers now buy less expensive or off-brand products instead of their typical choices.

Despite a general wariness about shipping reliability during the holiday season, nearly half (46%) of shoppers do not anticipate major delivery issues this year and only 34% expect some delays. Instead, the survey shows consumers have adjusted their priorities for cost-effective options over rapid delivery.

Despite their belt-tightening, retailers are confident of their ability to fulfill orders and respond to market changes. 

Investing in Technology 

Amid a softening labour market, supply chain leaders and retailers are investing more in technology and automation to navigate peak season demands. 43.6% of retailers plan to make fewer seasonal hires this year, with 68.4% considering hiring a non-priority altogether.

In contrast, 58.4% of supply chain leaders plan to increase their workforce to manage peak demand, despite labour constraints. To make up for fewer seasonal hires, 34.8% of retailers are utilising automation, while 52.4% of supply chain leaders are investing in improving logistics software.

61.2% of retail leaders reported recent investments in new technologies to improve the efficiency of their supply chain.

Retailers are also applying the latest AI technologies to solve the problems listed above. 80% of retail and supply chain leaders see AI as a solution and are leveraging AI tools to improve inventory management, demand forecasting, and customer service this holiday season.

“This is a unique holiday season in many respects, but retail and supply chain leaders seem prepared for the challenge and seem confident in their ability to meet consumer expectations,” says Ann Sung Ruckstuhl, SVP and Chief Marketing Officer of Manhattan Associates. 

“The importance of an agile and nimble supply chain is evident, and deploying the right technology is more critical than ever before. The key to matching consumer expectations and giving shoppers the memorable experience they demand is to tighten the back end, have complete insight into every part of the product’s journey, and truly embrace a unified commerce approach in order to succeed.”