How US retailers are preparing for this year’s holiday shopping period

For retailers, few dates on the calendar are as busy or tricky to navigate as the yuletide season.

According to the National Retail Federation, US holiday sales exceeded US$964 billion in 2023, marking a 3.8 per cent increase from the year prior. 

With the peak trading period only a few months away, now is truly the time for retailers to double down and invest their efforts into optimising their inventory and fulfillment operations. 

However, there are some factors that retailers have to keep in mind to ensure they aren’t placing energy or finances where it is not best applicable. 

Over-ordering and under-organising

Steve Ross, an omnichannel solution principal at retail tech company Aptos, shared several common errors retailers make when it comes to inventory and fulfilment operations.  

“From an omnichannel standpoint, we often see retailers focused too heavily on sales and not enough on profitability.”

For example, after many retailers ran out of stock in 2020 and 2021, thanks to the circumstances caused by the pandemic, they over-corrected by placing larger-than-needed orders in 2022. This led to excess goods when spending patterns eventually shifted back to pre-Covid levels. 

According to the Census Bureau, retailers held almost US$760 billion in inventories in August 2022, up by a shocking 30 per cent from August 2019, approximately double the rate of sales growth in that period. 

One way retailers can navigate this issue is by using AI-powered predictive technology to account for various factors, from social media trends to weather patterns to previous sales numbers, to more accurately order inventory. 

Walmart has been using advanced AI technology to optimise inventory management for a few years already. 

In partnership with Brain Corp, an autonomous technology company, Walmart rolled out over 600 specialised scrubbers with inventory scan towers, which can distinguish different brands and their inventory positions on the shelf with more than 95 per cent accuracy. The big box retailer can then more accurately determine how deep the shelf is, making it easier for associates to restock products and for managers to place more accurate inventory orders.

Hiring the right people at the right time

Another major issue retailers often encounter in preparing for the holiday season is poor planning of the number of employees needed per location.

“When it comes to peak season staffing, retailers often fall short of having enough staff to handle both the influx of omnichannel orders coming into the store for fulfillment and the needs of walk-in customers,” Ross explained. 

Retailers can navigate this issue by interviewing and recruiting seasonal employees three to four months ahead of time, taking into account the previous year’s sales and the expected sales for the upcoming holiday season to determine a proper employee-to-store ratio.  

Strategies to properly prepare

Ross pointed out that another major issue during peak periods is ensuring that everyone working within the business is collaborating and communicating, rather than operating in siloes. 

“Retailers need to be realistic and think about their entire inventory network and how they want to use it to fulfill customer orders in the most profitable way,” he elaborated. 

Ross recommended that retailers bring an omnichannel expert into the team if they haven’t already done so, or a similar person to help ensure that all the function areas “play well in the sandbox”. 

He emphasised the importance of retailers looking at their stockrooms through a logistics lens, noting that “one of the first things a retailer should look at is how they plan to leverage the front of the store (sales floor) for their walk-in customers and the back of the house (stockroom) to ship and fill e-commerce orders.”

Where the front of the store needs to be all about delighting and giving customers a great experience, retailers must ensure that the back of the house focuses on efficiently packing and shipping hundreds of outbound customer orders. 

Finally, Ross recommended that retailers ask themselves the following questions to build an optimal omnichannel sales plan during peak season:

• How many ship-from-store orders do you expect to process per day?
• How many buy online, pick up in-store (BOPIS) orders do you expect to fulfill?
• How long does it take to fill an order?
• How do you expect these orders will flow in throughout the day?

Ross warned that when preparing for the holiday season retailers must remain flexible, and he said they need to build multiple contingency plans and be ready to use them if necessary. 

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