From the initial panic-buying as COVID-19 took hold, to a stratospheric demand for certain products, such as food items and PPE equipment, many BCMPA members were soon reporting record activity levels that far exceeded even those of the Christmas peak.
Now, having had several months to adjust to this extreme period of uncertainty, members are unanimous in their view that, while recent events have provided some very positive business lessons, the face of consumerism is likely to change for the foreseeable future. The problem, though, lies in determining precisely how far consumer behaviour will change, and therefore what measures retailers, manufacturers, packers, warehousing and logistics firms will need to put in place.
The jury is still out as to how consumers will respond in the medium and long term to the easing of restrictions on high street retail. The lockdown has nevertheless seen a huge spike in online shopping, notably for food products but also because consumers were denied access to stores selling non-essential items. So, while we await the outcome of how the “new normal” will actually affect the high street, BCMPA members predict that the steep growth in e-commerce is no flash in the pan.
In the fast lane
Gavin Williams, managing director, supply chain – UK and Ireland, for XPO Logistics, said: “We saw e-commerce volumes hit the fast lane in the space of five weeks and it hasn’t slowed down. Demand for fulfilment has accelerated by 20-50% with some products. I believe this channel switch will be permanent for certain consumers – we will learn more about the level of adoption once the retail bricks and mortar option returns.”
Paul Price, managing director of Leicester-based contract packer and logistics provider Lemonpath, agreed: “Our logistics and e-commerce fulfilment division experienced rapid growth in activity levels as daily consumer orders rocketed,” he said. “Online sales have remained high and activity levels are still exceeding what we would normally expect in the run-up to Christmas.”
He added that, although certain items predictably topped the list of main sellers, such as beauty and haircare products, soaps and antiseptic mouthwash, online sales of women’s footwear have seen a surprising 53% increase during lockdown, compared with the same period last year.
Warehousing and logistics provider Speedpac tells a similar story. The Wellingborough firm’s managing director Dave Brocklehurst said: “I see a big shift towards online purchasing, as many new online customers have been created, who have had no choice but to try it during lockdown. This may result in a reduction in seasonal retail numbers.”
So how can BCMPA members prepare for the seasonal peaks, when there’s simply not enough evidence to fully predict future consumer patterns?
The industry has had decades to learn how to deal with the demands of Christmas. We know when it falls, and we’ve always had the luxury of the previous years’ figures to hone our plans for the next year. Likewise, the relatively new UK phenomena of Black Friday and Cyber Monday have now had several years to bed in, so, after some initial challenges in the early days, these peak retail events have become much easier to plan for.
But, given the upheaval and changes to consumer behaviours due to coronavirus, the feeling among BCMPA members is that, perhaps apart from Christmas, the rule book for other seasonal peaks may have to be re-written.
“This year is going to be challenging for retail supply chains,” said Gavin Williams. “Some of our retailers are going to need to recover lost sales – there’s a lot of stock in the chain that needs to be cleared. As a result, I can see perhaps more ‘Black Fridays’ this year. I can see a lot of the traditional seasons changing, which creates uncertainty.”
Brocklehurst, Price and Williams all agree that labour will prove the greatest challenge in this new, unpredictable world, especially in terms of reacting to potentially new or changing seasonal peaks. The Government’s proposals of restricting immigrant labour, from Eastern Europe for example, presents a real problem.
“Client forecasts and historical data can assist to some degree, but we are subject to several factors outside our control,” commented Price. Lemonpath has the benefit of on-site temporary labour providers, who are able to respond to changes in required staffing levels very quickly, yet this year still presents more challenges than before.
So, while there is undoubtedly an inescapable feeling of uncertainty within the industry of how forthcoming seasonal peaks might play out, it is by no means one of paralysis.
Back in March, our members saw their business models change overnight. They had just one week to prepare for an unprecedented change to their operations, having to respond incredibly quickly to vast swings in consumer demand. If they can get through that, the feeling is that they can get through anything. COVID-19 has led to better staff and customer relations, more efficient operations and a heightened readiness to be ultimately flexible. That can be no bad thing.