Back to Insights

Top Peak Season Planning Challenges Retailers Face in 2022

Blog Post
As retailers plan for peak season, they’re grappling with some key challenges.

As retailers plan for peak season, they’re grappling with some key challenges. Radial recently conducted a LinkedIn poll to discover the top four challenges retailers are facing this year. Here’s how the respondents ranked them:

  • 71% are concerned about labor shortages
  • 13% are concerned about eCommerce fraud
  • 9% are concerned about inventory visibility
  • 7% are concerned about storage capacity

Despite inflation and industry challenges, 2022 US eCommerce sales are forecast to pass the $1 trillion mark for the first time. Current market conditions are expected to shape consumer behavior this holiday season, with shoppers likely to shop earlier to avoid rising prices and buy fewer gifts than last year.

While retailers are seeing bottlenecks in global supply chain networks ease, high fuel prices and carrier surcharges continue to make the first- and last-mile more costly. Overall, eCommerce sales are leveling out as shoppers balance digital with in-store shopping and an overall softening of demand. With multiple factors expected to impact holiday shopping this year, let’s explore the four peak season planning challenges in our poll.

Labor Shortages

The cost of labor has skyrocketed for retailers, while the cost of living for employees has spiked. The Great Resignation continues to impact labor supply, and labor shortages make it difficult for retailers to deliver on customer experience promises. With labor shortages impacting most industries, it also causes disruptions in order fulfillment, transportation, and final mile delivery.

Stores have had to alter their hours while store associates are struggling with increasing demands to serve as customer service, store fulfillment professionals, brand influencers, and sales floor staff. Now that store fulfillment—like buy online, pickup in-store (BOPIS) and curbside pickup (BOPAC)—is a mainstay for most retailers, it’s important to be able to meet digital and in-store customer expectations during peak season and the balance of the year.

It’s unlikely that the labor shortage will ease soon, which means retailers need to turn to technology and automation to help support current employees and deliver an exceptional customer experience. Omnichannel technology can provide a streamlined experience for employees and customers with order management and orchestrationstore fulfillmentdropshipmarketplaces, and business intelligence and analytics. By integrating into existing customer relationship management (CRM), enterprise resource planning (ERP), supply chain, third-party logistics, and shipping systems, retailers have a single platform with real-time visibility into every part of the customer buying journey.

eCommerce Fraud

Just as the pandemic created a massive surge in eCommerce transactions, it also provided numerous nefarious opportunities for fraudsters as well. Keeping customer and business data safe during high-traffic times like Amazon Prime Day, Black Friday, Cyber Monday, and in every transaction throughout the year has become more challenging.

Equally as important to blocking the bad guys is making sure trusted customers get through. False declines damage customer experience and can lead to a loss in loyalty, particularly in a season where customers are expected to shop based on experience and price. While customers want to be kept safe, they also want fast, seamless transactions. A successful peak will depend on ensuring that eCommerce fraud is mitigated while every trusted customer gets through.

While fraud detection software and cybersecurity platforms are designed to mitigate fraud and improve security, not all are specifically designed for eCommerce businesses. Additionally, having a unified payments, tax, and fraud solution can ensure that every piece is accounted for and that consumer expectations for security are met. Now is the time for retailers to evaluate their fraud solutions to be sure they are well-prepared. 

Inventory Visibility

Retailers need real-time visibility into inventory to successfully implement omnichannel strategies like BOPIS and BOPAC. As orders and purchases scale during high-volume peak seasons, making sure inventory is in stock and available for peak shipping or pickup can be the difference between successful peak season operations and losing customers to competitors.

One of the biggest challenges retailers face is knitting together their software systems, such as their order management system (OMS) and logistics operations, ERP, CRM, suppliers, etc. Applications that easily integrate into one another share data and can provide a single lens—or single source of truth—to the business.

Retailers that do not have this capacity now should consider upgrading their order management solution provider as part of their peak season planning. A solution that provides enterprise inventory optimization with real-time global inventory visibility and flexible rules will help meet service levels during periods of high demand.

Storage Capacity

As supply chain disruptions have begun to ease and demand has softened, many retailers are facing a glut of inventory and not enough space to store it. Retailers using store fulfillment options have limited space for inventory, which has led some retailers to consider refusing returns while issuing refunds and having customers keep the items to avoid the cost of storage, reverse logistics, and returns processing.

Others are acquiring additional warehouses, building them to handle the overload, or securing temporary space from a third-party logistics provider. The overload of inventory is a temporary consequence of the pandemic and supply chain problems, and will likely resolve itself once supply chains are operating smoothly again. Due to inventory issues, retailers have had to guess at lead times for orders while supply chain leaders have been unable to forecast when shipments will arrive due to problems at ports and customs.

Unlike previous years, this peak season may see massive markdowns and clearance sales to move product faster, while storage capacity may remain a problem for the foreseeable future. Retailers that do not want to invest in their own warehouses can consider adding the capacity of third-party fulfillment centers to their strategy.

Third-party fulfillment centers that have the global capacity to keep inventory close to customers and provide fulfillment services can be the solution retailers and eCommerce brands need this peak season and while supply chain issues linger.

What’s Next

“Having a partner that can share best practices across fulfillment technology, real estate, and peak preparedness can enable retailers to overcome many of the challenges they face and support their success during peak 2022,” said Brady Berg, Radial’s vice president of sales. “A key differentiator in this environment is bridging the gap between physical and digital buying journeys to create a truly omnichannel shopping experience for customers.”

Learn what our latest survey reveals about consumers’ shopping behaviors for the 2022 retail peak season.