How big brands responded to the pandemic, and what supply chains can learn for the future.
2020: The year of a global pandemic, the year of a worldwide economic recession, and the year of massive business transformation for supply chains across the globe. Navigating through the pandemic has been no less than a roller coaster ride for supply chains; with all the social distancing, travel, and trade restrictions, and the fast-changing consumer buying behaviors.
Brands that could adapt to the changing dynamics fast flourished like never before, even amidst the crisis. As we enter the last quarter of the year, let’s visit some major trends that have come to light over the course of the pandemic. Businesses in the supply chain can take cues from these rising trends, and prepare for better days ahead, with more resilience and greater agility.
During the first few months of the pandemic, it became evident that going forward, online shopping will be the new normal. Initially, people rushed to supermarkets and local retail stores to stockpile essential supplies, but as lockdowns were imposed, online shopping of groceries, food, medical supplies, and household essentials became popular among the masses.
Big-scale retailers like Amazon, Target, and Walmart are making the most of this growing trend, by expanding shopping options and introducing convenient delivery offers such as doorstep contactless deliveries and curbside pick-ups.
Walmart saw a 97% uptick in Q2 online sales in the United States, mainly led by food and general merchandise purchases. According to reports, it is the retailer’s biggest earnings in 31 years. The company is also planning to introduce Walmart+, a membership program for its customers, similar to Amazon’s Prime membership program, with express delivery promise and other perks for subscribers.
Another of America’s biggest retail corporations, Target, has seen exceptional online sales in the second quarter of 2020. Sales online and same-store sales climbed by 24.3%, an all-time high for the retailer. Target’s CEO, Brian Cornell, said in a statement that the retailer attracted 10 million new digital customers and picked up $5 billion in market share in the first half of the year.
At the same time, Home Depot, USA’s largest home improvement retailer, posted a splendid Q2 result with a 23% increase in quarterly sales, as people across the United States were stuck in their houses, and were taking on home-repair DIY projects. Across the store, big-ticket items, like lawn mowers and patio furniture, sold well during the quarter.
While E-commerce is undoubtedly a booming market today, the pandemic has also given rise to some interesting distribution trends, such as curbside pick-ups, contactless deliveries, Buy Online Pick-Up In-Store, and Pick-Up and Drop-Off services.
69% of shoppers consider home delivery as the safest option of shopping since the outbreak of the pandemic. Hygenic grocery delivery and “click-and-collect” pickup services in the U.S. rose to 31% since the outbreak. In fact, sales through Target’s curbside pickup service shot up by more than 700% in the second quarter from a year earlier. The company’s sales fulfilled by its online delivery service Shipt grew more than 350% year-over-year.
There has also been a steep rise in the demand for home services across America. Home cleaning and repairs, salon and beauty treatments, and electrician and plumbing services are USA’s most popular on-demand home services. For home service providers too, offering safe, timely, and efficient last-mile services is a top priority.
As the consumer’s demand for safe, hygienic, and express delivery, has gone up significantly due to the pandemic, businesses have come to realize that efficient last-mile logistics is the key differentiating factor between good and ordinary brands, now more than ever before.
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In order to keep the same-day delivery and express delivery promise to its customers, E-commerce giant Amazon is reportedly in talks with Simon Property Group (SPG), the largest mall owner in the United States, to convert redundant JCPenney (JCP) and Sears (SHLDQ) stores into distribution centers to deliver last-mile packages. It is a strategic move by Amazon, as it will ensure greater proximity to customers, thereby increasing delivery speed.
As brands across retail, FMCG, home services, and hyperlocal deliveries continue to bring innovative new strategies for last-mile fulfillment, businesses in the supply chain must take lessons from the ongoing dynamics to prepare for the future. Tech adoption in logistics is essential for supply chain businesses to stay resilient and competitive in the coming years.
Businesses should certainly leverage Artificial Intelligence-based solutions such as route optimization, fleet management software, parcel sorting, and dispatch planning solutions to optimize last-mile delivery operations and bring more efficiency, transparency, and consistency in logistics.
Locus offers best-in-class logistics technology solutions to supply chain enterprises to improve last-mile deliveries. Get in touch with us for a quick tour of our solutions.