After a gradual, cautious reopening of society and the economy throughout summer, September has seen the first example of UK Prime Minister Boris Johnson’s often mentioned ‘squeezing of the brakes’. The Rule of Six marks the first response to a sudden, exponential rise in Covid-19 cases in recent weeks, with advisors and senior politicians unable to rule out that a second national lockdown over the winter months is a strong possibility.
And if that lockdown includes closing hospitality venues, offices and non-essential travel once more then we should expect the trends seen in March and April to return – a surge in online and delivered services, a further catastrophic blow to high street retail and another boon for local and neighbourhood businesses.
Only this time, lockdown would coincide with Black Friday and Christmas, resulting in what some industry experts have coined a ‘super-peak’.
So what might that look like? For many retailers, last Christmas left a lot to be desired. Sales at food stores fell by 1.3% month on month in December 2019, while department stores slumped by 2%.
Online retailing told a different story. Digital sales overall grew by 0.4% to 19% share of sales, with Amazon soaring by 21% year on year last Christmas. When we consider how this changed at the height of lockdown, online sales made up just over a third of all retail sales. Combined with Christmas, businesses may even find themselves needing to utilise their physical stores on high streets to better cater for online ordering.
And predictably, this is set to have a knock-on effect on logistics companies too. The major players are already gearing up. In June, DPD created 6,000 new jobs including 3,500 new drivers as part of a £200m new investment. DHL has similarly unveiled plans to scale up its ecommerce offering, taking on sites in Yorkshire and Hampshire, adding more than 160,000sq ft of space.
It’s a similar story in the US with UPS hiring more than 100,000 extra holiday workers and FedEx planning 70,000, 35% more than it did last year. It’s not just in logistics where mass hiring is taking place. Morrisons and Iceland have unveiled plans to hire thousands, the latter looking for staff to support its delivery trial with Uber Eats.
Black Friday will be the first test. Last year, 77% of transactions were made online, so it’s certain that the internet will be the major battleground for consumer attention this year. In 2018 the average person received 43% more emails on Black Friday, so any business tempted to bring back the touchy-feely ‘we care’ Covid emails from spring might consider making their messaging a little more engaging and actionable this time around.
As anyone working in logistics knows, the increased volumes are only half the story. Companies were sent a hard-hitting reminder that in times of crisis, it’s the frontline workers that call the shots. Parcelforce bosses were left without workers for an hour back in April when drivers downed tools over safety concerns. Companies would do well to make staff wellbeing a genuine top priority this Christmas, as similar action over the festive period will be crippling. Any frustrations will likely play out longer than an hour this time around as people’s patience, already worn thin, could turn mutinous.
And human emotion is one unpredictable variable that companies are already experimenting with removing. In America, the pandemic has intensified the race for e-commerce companies to invest in technology, particularly in data and electric vehicles, with Scott Phillippi, UPS fleet maintenance and engineering senior director, telling Reuters earlier this month: “It’s not just about making the wheels turn with a zero-emission vehicle. It’s about an integrated technology vehicle. That’s what we’re really pushing for.” UPS has also ordered 10,000 vans from UK start-up Arrival, which is working on self-driving technology.
Expanding workforces, sweating existing assets to cater for digital orders, communicating effectively and intelligently using data will be the ticket for many businesses to survive this winter. For future success, businesses need to fundamentally change their understanding of human resources and technology to survive. In our next blog we will look at more strategic ways that artificial intelligence can help prepare for a super-peak and any subsequent peaks in 2021.