CBRE: 2020 U.S. Retail Holiday Trends Guide expects e-commerce to grow at more than 40%

With the ongoing COVID-19 pandemic continuing to change myriad aspects of everyday life, holiday season shopping is clearly not an exception, according to the 2020 U.S. Retail Holiday Trends Guide, which was issued this week by Los Angeles-based industrial real estate firm CBRE.

The wide-ranging report addresses various ways in which the 2020 holiday shopping season will be different from any other.

One of those ways focuses on major growth in e-commerce sales, with holiday season (November and December) retail sales expected to grow at more than 40%, up from 2019’s 14%.

This ongoing—and expected—growth is expected to impact both retailers and consumers alike, explained CBRE, most notably in the form of increasing carrier surcharges and delivery costs over the course of peak season.

“More sales are expected on Cyber Monday as retailers enhance virtual showrooming and drive online purchasing to replicate the deals, impulse buys and excitement that typically occurs in physical stores on Black Friday,” the report stated. “However, retailers must prepare to spread online sales across October, November and December. Having already experienced holiday-like e-commerce traffic and sales volumes in Q2 and Q3 for which they were unprepared, retailers are working diligently to gauge consumer demand and quickly improve online presence, product availability, fulfillment efficiency and to optimize pricing and shipping costs. Brands must be competitive on value and convenience, while providing a frictionless multichannel experience.”

What’s more, it added that retailers also need to factor in rising carrier surcharges and escalating delivery costs implemented by UPS, USPS and FedEx during peak season.

“Increased carrier fees have been a direct byproduct of the explosive growth of e-commerce sales in 2020, presenting a significant added burden to retailers,” it said. “The delivery of online orders is not as profitable as purchases fulfilled in-store, but retailers want to avoid raising product prices and passing through increased shipping fees to consumers. The longer consumers wait to shop this holiday season, the more they face limited inventory availability, increased shipping prices and delayed delivery.”

On a CBRE-hosted media call this week, John Morris, CBRE Retail Leader, said that even though e-commerce sales are rising, they also impact retailers’ margins in a few different ways.

Inventory was at the top of his list, citing the impact of inventories’ varied costs and also how managing inventory through e-commerce in more locations is more challenging and requires more working capital for retailers.

And the same goes for transportation costs, which he said is 10-to-15 times more expensive for a box to a door than what used to be a pallet to a store.

“Five-to-10 years ago, the Christmas transportation cost, to end the season, was simply to get a pallet of gifts to the back of the store,” he said. “It is now that piece of it in two more locations, with more inbound freight, and also small package freight and parcel freight, the boxes to every doorstep. That is an incredibly challenging part of transportation…and is what really makes that business hard to break even on sometimes.”

And he added that, in turn, forces major retailers and e-commerce companies to very carefully manage that piece of their supply chains, and will always be more challenging than something like moving a full truckload of gifts to a backup store.

Another e-commerce-related impact on retailers’ holiday season margins is returns, given that roughly 30% of all items delivered via e-commerce are returned, with that percentage sometimes rising significantly during the holiday season and also serving as a huge part of what he called margin decay, for retailers.

In order for retailers to efficiently manage the holiday season crunch, Morris said that one imperative move is to find a dedicated outsourced logistics services partner to help with fulfillment, in a retail fulfillment center or from the back of a store.

“许多较大的第三方物流(3 pl)有限公司mpanies have [staff] dedicated to exactly this requirement,” he said. “Find the best partner to do your shipping for you so you can have something more like the major e-commerce companies. There are lots of good 3PL partners.

Along with the surge in e-commerce, other key holiday shopping trends cited by CBRE in its report were related to:

—slower brick-and-mortar sales, which the report said will slow as total retail sales increase, driven by unprecedented e-commerce growth;
—a longer shipping season, with the traditional holiday shopping season starting earlier than ever before, with retailers trying to spread out—demand to prevent overtaxing supply chains and control crowds as consumers seek early promotional sales; and
平衡安全和身体保留的经验l to provide safety, comfort, and convenience for employees and consumers, while maintaining the festivity and excitement of the holiday season.

To read CBRE’s 2020 U.S. Retail Holiday Trends Guide, clickhere.