The pandemic shift to ecommerce is set to make Black Friday the biggest online ever, with sales expected to be up 14%, putting growing strain on an already stretched delivery network.
According to research by PriceRunner, the value of online sales on Black Friday will increase by 14% in the UK this year, with offline sales at best flat.
ParcelHub, meanwhile, believes that online could well be 50% busier for most retailers by Christmas and warns that many retailers and distributors are already becoming stretched, with Black Friday likely to kick off an even bigger rush.
Peak like no other
The move to online over the lockdown and beyond has already kick-started an online peak and Black Friday is set to reap that – making it a peak like no other previously encountered, says PriceRunner.
In a highly unpredictable present and future, forecasting how much UK consumers will spend on the Black Friday sales is not the easiest feat. In 2019, total retail spending during Black Friday was forecast to reach 8.6 billion.
Mikael Lindahl, Head of Growth at PriceRunner, predicts a large growth in online sales this year: “We expect the total value of online and offline sales on Black Friday to be flat this year compared to last year,” he says. “This means that online sales will grow by 14% and offline fall by 12%. This is mainly driven by a weaker economy, higher unemployment rates and social restrictions causing lower consumption overall, with a higher concentration of online spending during the Black Friday week. This year it will be more important than ever to make savings on Christmas presents, household products and more, where the Black Friday sale is a good time to do just that.”
During the many months of lockdown in the UK, online retail sales surged with shops forced to close and people ordered to stay indoors. According to the Office for National Statistics (ONS), the total volume of retail sales in April fell by 18.1% in the UK while online sales grew by 30.7%.
As the pandemic continued, online spending increased by 33.4% in May, with signs of slightly declining online sales from June and July as some shops and restaurants reopened. However, the strong growth experienced over the pandemic has mean that the value of online retail sales was still 46.8% higher in August than February’s pre-pandemic levels.
“We have seen a shift in consumer habits as a result of the pandemic, with more people shopping online than ever before, including older generations buying products online for the very first time, causing a drop in visits to brick and mortar shops,” says Lindahl. “We believe this trend is here to stay and will continue far beyond the pandemic, as this has evolved and shaped our industry many years ahead of time. “
Delivery challenges like no other
ParcelHero, meanwhile, is warning of a record online Christmas that will double deliveries for many retailers and potentially snap overstretched supply chains.
ParcelHero’s Head of Consumer Research, David Jinks MILT, says the double-whammy of families, separated by Covid restrictions, mailing their gifts, plus a shortage of skilled drivers created by Brexit, could prove a mountain too high to climb.
He is urging retailers and couriers to start escalating their Christmas planning immediately to conquer the Mount Everest of Christmas peaks. “The huge demand for deliveries is being compounded by the reported loss of a quarter of a million EU nationals from the UK economy this year, which will lead to a 30% shortfall in drivers and warehouse workers,” he says.
“Even though many retailers and delivery companies are attempting to hire thousands more staff in preparation for this year’s Christmas peak, this might be difficult to do in practice. Retailers may need to radically shake up their Christmas distribution plans,” he adds.
Despite a partial pick-up of High Street store sales in recent months, online sales are still more than 50% higher compared to a year ago, according to ParcelHero data. ParcelHero had its busiest day ever just last week and online pure-play Ocado has overtaken Tesco to become the UK’s most valuable retailer. This year’s home delivery growth is unprecedented for both parcels and groceries.
“With capacity already stretched, the impact of Christmas can’t be underestimated,” warns Jinks. “For many retailers, Christmas at least doubles their usual sales. Indeed, there are some companies that run at a loss for the rest of the year and make almost all their profits at Christmas. With many families unable to get together this Christmas, more people than usual will be sending presents to loved ones and ordering their gifts online. We anticipate Christmas volumes could be 50% higher than last year.”
As a warning, Jinks points out how it only took an increase in the popularity of online Black Friday shopping in 2014 to cause Christmas chaos across the retail and delivery industry. Nearly one in three (31%) online shoppers experienced problems with their orders that Christmas, 49% suffered from missed deliveries due to overstretched companies’ erratic delivery patterns, while 45% experienced late deliveries or never received their goods.
The spike in online orders caught many of the UK’s most respected brands off-guard. The likes of AO.com, M&S, River Island, Currys-PC World, Shop Direct and Debenhams all admitted to disruption to their delivery networks in fulfilling the record amount of orders. Even Amazon found itself overstretched, while Yodel was forced to stop picking up parcels from retailers as it struggled under the weight of demand.
There’s no doubt the problems of Christmas 2014 could be repeated this year if retailers underestimate the scale of the challenge. Berry Recruitment, one of the largest temporary worker suppliers in the country, says demand for delivery drivers is running at 30% above supply. It believes a combination of a huge increase in online ordering and fewer European workers has created a perfect storm.
This view is supported by findings from the business news service Quartz, which analysed data from the Government’s Office of National Statistics (ONS) and found around a quarter of a million people from the EU have left the UK economy since the start of the year, because of the impact of both Covid and Brexit.
via https://AiUpNow.com October 7, 2020 at 05:18AM by Paul Skeldon, Khareem Sudlow,
