Retail 2020 – A Year of High Season

high seasonOne thing is certain – there is no normal in 2020.  What we have experienced so far this year is either a blip that we will look back at and wonder on, or our lives have fundamentally shifted, and 2020 is really just Year One.

Either way, what we understand about this year is that Covid-19 has upended everything about the status quo. The pandemic has exposed all of our weaknesses and all of the cracks in our frameworks. What it is, is a compelling reason to change, and luckily there are solutions and strategies to meet the uncertainty, and so more than anything, 2020 is a year of transformation.

A couple of weeks ago a CEO asked me if I expected or believed that the potential second wave would bring empty shelves.  I shook my head. I don’t believe that we will see the same disruptions that we saw at the beginning of the pandemic – especially not for essential items.

When the pandemic began there were a lot of uncertainties and unknowns about the virus, and so consumer buying patterns were chaotic. We are only human, after all.  We reacted to the situation emotionally and that was why we saw paper towels, toilet paper, hand sanitizer and other essentials being emptied out of store shelves. But over the last six months the demand and supply have adjusted in terms of price and quantity and the segment of essential goods has mostly normalized.

However, the pandemic has accelerated the altering of buying patterns, and I believe it’s done that for good. The eCommerce market size is expected to grow at a compound annual growth rate (CAGR) of 14.7% from 2020 to 2027, and it is expected to account for more than 95% of all sales by 2040. This year alone, eCommerce sales will surpass $4 trillion dollars.

I don’t have any reason to believe that online shopping will suddenly slow down over the coming months. In fact, what I have seen and helped implement with many customers this year is the combination of the digital and the physical. Companies don’t want to lose their physical space completely. They may want to reduce footprints, but they know it’s good to have a physical presence in markets where they expect to have growth. To meet this challenge they have to execute on physi-digital strategies that provide the quickest and safest services to customers. The important thing here is that companies are giving customers the option to decide if they want to go to stores or stay in the safety of their homes to complete their shopping.  This is the critical requirement in meeting the challenges of Year One of the new world.

Implementing these processes is definitely not easy because businesses have to rethink and reengineer all of their processes under pressure. With IT landscapes exposed, I have seen many operational issues needing to be addressed. A lot of the businesses I worked with were not fully migrated to the cloud, and really in order to support these kind of activities in the physical world, a digital transformation is the key to surviving.

And to make matters more complex, now, in the northern hemisphere, we are starting our fall and winter seasons. High season is upon us. But based on the volumes of certain segments the past 6 months, one could say High Season started back in March. High season is already here. So what to make of the holidays? How are businesses planning to deal with holiday sales? What will Cyber Monday look like? What will Black Friday look like? Do they even matter anymore?

Well, of course, I think they do, but something to keep in mind is that Amazon Prime Day was moved this year from July to mid-October. Amazon Prime Day is now a kickoff event for what may be an intense season of holiday shopping. And maybe this is the beginning of a shift. Maybe this pandemic has moved the start of holiday shopping from the day after Thanksgiving to two weeks before Halloween!

Either a Blip or The Start of Something New

As we get closer to the holidays and six months after the beginning of the pandemic in the United States, I believe shopping patterns for the holiday season will be determined by the new world we live in and the new lifestyles we are experiencing.  I believe it may even be determined by pent up demand! This year, I predict there will be huge demands for goods and products that are going to increase quality of life rather than wish lists of items that do not add value to people immediately. That said, I think sales might be down overall, but eCommerce will boom, especially in essentials and electronics.

And the largest beneficiaries of this eCommerce boom will be the big three. Amazon, Target, and Walmart will dominate the market – reflecting what we have seen now in the last few years, but also proving the adage that bigger is better in times of crisis.

But that’s not to say that other companies or smaller companies can’t partake in the eCommerce tsunami that is about to wash over us. I have been pushing my customers really to move fast on their cloudification efforts, to work hard with manufacturing, retailers, consumer good products companies to respond and accelerate their cloud migrations.

And while I’ve been preaching this for the last decade, 2020 is the year when everybody just gets it. As a cloud vendor, my main goal has been to remove all the stresses on system performance and to allow my customers to focus on their core business by using us as an extension of their organizations to achieve their goals and bring in shareholder value.

My hope is that this fall will not lead to another lockdown, but if that does happen, I think we can rest assured that businesses have pivoted quickly to understand better the mix of physi-digital shopping. Click and collect is the way to maximize and grow retail, and the businesses that have embraced eCommerce and invested over the last six months in digital technology will certainly have their share of the consumer pie in this very challenging year.

In short, this virus is the trigger to modernize technology that arguably should have been modernized 5 years ago. So even though it was 5 years ago when I was making the recommendation to change, retailers can still catch up and catch this wave. eCommerce is the new normal in shopping, and you owe it to yourself to get in on the business here at year one.

high seasonDiego Pantoja-Navajas is vice president of WMS development at Oracle and former founder and CEO of LogFire. He is an industry thought leader in SCM who enjoys exploring the impact of advanced and emerging tech on supply chains.

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