Pent-up consumer spending is roaring back after 18 months of disruption. But the supply chains that crisscross the world are woefully tangled, threatening shortages in everything from Thanksgiving turkeys to semiconductors to toilet paper. Below, we unpack the supply chain crisis and offer our advice on getting your business – and your people – through a holiday season riddled with complications.

What’s driving the crisis?

COVID-related factory closures and distribution bottlenecks on the other side of the world are clashing with rebounding US consumer spending and rising geopolitical tensions. An unprecedented labor and skills shortfall in the US means getting goods out of the ports and inventory into stores is chaotic. More than 70 percent of all goods consumed in America move by trucks at some point in the supply chain, yet, there’s a national truck driver shortage. The result? ‘Containergeddon‘ at American ports, and a holiday season marked by fewer deals, soaring prices, and out-of-stocks.

What’s the impact on sales?

Holiday spending could hit $1.3 trillion this year, a 7% to 9% increase on 2020 (11% to 15% in eCommerce). Shoppers are ordering stuff in record numbers, but it is another story when they’ll actually get it. And while consumers can expect great deals once the containers are unloaded, that may not come until next year.

How’s it affecting retailers?

They had to start Christmas early. Generally, Black Friday marks the start of the season, but stores were pushing holiday promotions forward this year to as early as mid-September. Big box retailers like Costco, Home Depot, Ikea, and Walmart have resorted to chartering their own cargo ships to avoid delays and soaring freight costs. Smaller businesses, on the other hand, don’t have this kind of clout. A small retailer might have only one pallet in one container on one vessel, but that pallet could represent next quarter’s payrolls. Inflated freight costs are wiping out their margins, just as delays are wiping out their inventories.

What’s the government doing about it?

On October 13, President Biden announced new measures to ease the crisis, including a new round-the-clock working pattern at ports, railroads, and other connected services. But, as we’ve been reporting, the labor market is in a state of rapid flux, following 22 million jobs lost in just two months. While critical players like the longshore and warehouse union (ILWU) have promised to work extra shifts, they’re not the only workers vital to getting our supply chains moving again. For that, we need to double down on restarting all the other parts of the labor market that came to a shuddering halt last year.

And what can businesses do?

Start holiday hiring early. (Very early.)
Half of US consumers plan to have their 2021 holiday shopping done by Cyber Monday (29 November). Businesses across the supply chain should have their seasonal workers lined up early.

Recruit for non-traditional shift patterns
Finding workers willing to work unusual hours is critical to solving the supply chain crisis. Our highways are less crowded in the evenings, and cargo moves out of ports much faster than during the day. But hiring for these working patterns is tricky and can often involve higher pay rates. A professional staffing agency can help strike a balance between optimum pay, due diligence, and speed-to-hire.

Look after your people
The holidays are an 8–12 week season. If you don’t take on extra staff, you’re likely to exhaust your current workforce. Driven by burnout, long hours, and customer hostility, millions are deciding that jobs all along the supply chain are not worth the effort, wage hikes or not. Employers need to get creative in their attraction and retention strategies, invest in wellbeing, appeal to candidates’ top motivators, and nurture a healthy work-life balance.

Optimize wages
The current crunch is pushing up consumer prices by as much as 20% this holiday season, canceling out many pay rises. Even with weak hiring in September, we saw strong wage growth. (Walmart just gave its warehouse workers a temporary pay raise of $1-5 more per hour through January 2022.) A pay increase is usually way cheaper for employers than the downstream outages that staff shortages inevitably cause.

At Adecco, we are stepping up to address the root causes of America’s skills gap and labor crunch, which overlap the current supply chain crisis. We’re investing in training people right here in America, including apprenticeships and work-based learning in critical industries like manufacturing. And we’re committed to providing thought leadership on the issues impacting the American workforce, like the upcoming infrastructure bill.

Learn how we helped a global transportation and logistics leader quickly recruit talent for last year’s peak season. Find out how our transportation hiring specialists are finding new drivers to meet spiking demand while taking the heat off tired workers. Or talk to us for tailored advice for you.

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The retail and consumer products industry has seen a large amount of change, especially within the last year due to the pandemic. There was already a huge shift happening from brick-and-mortar to online shopping and COVID-19 amplified that shift drastically.

Not to mention the increased production needs for certain items such as produce, hand sanitizer, cleaning products, and of course, masks. As we look ahead into 2021 and move forward into the future of this industry, let’s take a look at what’s “in-store”.

Looking Ahead into 2021

Diving into e-commerce and online shopping, let’s look at a few important excerpts from “The Future of Ecommerce Report 2021” by Shopify.

“E-commerce is at an all-time high. Lockdowns, travel bans, and retail closures forced the consumer online, and the world’s largest retailers soon followed, in some cases selling direct to consumer (DTC) for the first time. But not all e-commerce newcomers had the infrastructure in place to deliver a world-class customer experience.

One way DTC brands are standing out in a crowded e-commerce space is through automated shipping and fulfillment. Orders must have fast, free, and sustainable shipping. And the unboxing video phenomenon has caused DTC companies to invest in custom branded packaging.

To better compete with marketplaces and retail giants, brands are also investing in richer, more personalized experiences. Humanizing their brand also aids in customer retention, now a top priority as acquisition costs rise, along with uncertainty in digital advertising.”

In summary and looking ahead, the industry is continuing to evolve and change, and retailers are having to keep up in many ways including shipping processes, product variety, and packaging. Plus, retail marketing and advertising teams are reevaluating how they target consumers as many have changed their spending habits and are also working fully remote and/or online shopping.

Keeping Up with Amazon

On both the retail and consumer products topics, many small businesses and retailers are having to keep up with Amazon on numerous fronts including pay rates, production, shipping, and sales. With the spike in online shopping, demand has increased, and patience has lowered, causing many consumers to expect their products immediately. Not to mention, Amazon is turning old brick-and-mortar locations into fulfillment centers. According to this recent article by CNBC, between 2016 and 2019, Amazon converted around 25 shopping malls.

Meanwhile, retail businesses both small and large are still facing the heavy impact of the pandemic. Fortune reported that a record 12,200 U.S. stores closed in 2020 due to the pandemic and major shift to e-commerce.

“Early in the pandemic, some big retailers like Walmart, Costco, and Target, as well as drugstore chains CVS and Walgreens were deemed essential by authorities and allowed to stay open, giving them an edge over the likes of Macy’s, Kohl’s, Nordstrom, and Abercrombie & Fitch. While those companies have so far weathered the storm, the pressure pushed many wobbly retailers over the edge and led to a record number of bankruptcies in 2020. On Tuesday, S&P Global Market Intelligence said U.S. corporate bankruptcies reached a high last year of 603 companies, including 125 consumer goods and retail firms. That included J.C. Penney, J. Crew, and the parent companies of Ann Taylor and Men’s Wearhouse, among others, adding to the carnage.”

Needless to say, the retail market is continuing to evolve amidst this uncertain time and the mass need for online options. On the talent front, retail companies are having to get more competitive with pay rates as they’re competing for the same talent with large companies like Amazon. We recently stepped in to help one of our retail customers solve their pay rate challenges which delivered a substantial return on investment, learn more here.

Adecco’s Approach

Our team of staffing experts is dedicated to staying “in the know” with the latest updates for retail and consumer products including technology, trends, and strategies.

Adecco values the retail and consumer products industry and can rapidly source and hire candidates with the right experience, expertise, and passion, and place them directly to fill our customer’s needs. Learn more about our strategic solutions through this pay rate increase case study as well as our entire resources section. Our teams at Adecco are ready to solve your specialized retail needs.

Contact us today to see how we can help you hire the talent you need.

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