Image of 2019 D3 Presentation Panel Part 2 blog header

Blog posts

FLEXE Hub: Retail & supply chain facts and trends

As the COVID-19 pandemic continues, we will provide regularly updated facts and trends that pertain to the retail and supply chain industries.

Every industry is being impacted by COVID-19. As the pandemic continues and evolves, we will update this post with new facts and trends we're seeing across the retail and supply chain industries. For more information, please also visit:

COVID-19 facts and trends in retail and supply chain

May 30, 2020

eCommerce sales are up, consumer confidence is not

According to the US Census, in Q1 2020, eCommerce sales were $160.3 billion, an increase of 2.4% from the previous quarter and 14.8% higher than the first quarter of 2019. But, consumer confidence has declined. The Consumer Confidence Index precipitously declined to 86.9 in April 2020, a 31.9% decrease from March, and The Present Situation Index saw a 90-point drop. These steep declines are primarily due to unemployment records and uncertainties due to COVID-19. However, short-term expectations did improve, but fluctuations are expected in the coming months as many aren't sure what the financial repercussions will be.

eCommerce can get expensive, but Target is still prevailing

Target has gotten a lot of praise for its ability to quickly pivot and accommodate more options during COVID-19. In Q1, more than 5 million people shopped on Target.com with 40% doing curbside pickup in stead of home delivery. Then in April, an average day had higher fulfillment volumes than on Cyber Monday in 2019. But it isn't cheap. The operations to support eCommerce fulfillment and curbside pickup has already cost impacted profits by $500 million due to associated costs.

The wrong kind of real estate footprint has left some retailers in the dust

The flood of eCommerce orders have left a lot of retailers scrambling to figure out what to do without losing sales. One major culprit is the lack of requisite warehouse capacity, fulfillment operations, and ability to move quickly. Online grocery sales is expected to grow 40% in 2020, but many do not have the infrastructure that will allow them to take part in that upslope. Meanwhile brick-and-mortar retail is already taking a hit with major household names shuttering their doors. In order to avoid being on that list, retailers are looking for more warehouse capacity and services to support a better online and delivery experience for their shoppers. Rightfully so.

May 15, 2020

Making moves: Online shopping grows despite decline in retail sales

Retail sales fell 16.4% in April from the month before, which is the largest drop since record-keeping began in the early 1900s. Manufacturing also fell 13.7% - the lowest since 1972. The sharp decline may be a result of restaurants being closed, but a large part of it is very clearly due to retail stores being closed. The exception in the decline was in eCommerce, or "non-store retailers", almost not surprisingly. Compared to March, eCommerce sales grew 8.4%. Other changes include:

  • Grocery sales were down 13.2%
  • Bars and restaurants were down 29.5%
  • Furniture sales dropped 58.7%
  • Electronics were down 60.6%
  • Clothing sales dropped 78.8%

Reshoring hits close to home for a lot of businesses

According to a recent survey, 64% of manufacturers say reshoring is likely following pandemic. Bringing suppliers closer to end consumers has been one of the biggest predictions for supply chain changes once we're on the other side of the pandemic. However, some are skeptical that the momentum will be sustained as we move farther away from the initial pang of the disruption.

Meeting in the middle: BOPIS grows 208%

Buy online, pick up in store (BOPIS) has had a big year. Social distancing has reduced in-store foot traffic for retailers that are still open, prompting many shoppers to opt for delivery or ordering online and driving to the store to pick up their order. The pandemic continues to accelerate eCommerce, but it isn't great for every category. Some are having to discount to the extent they would for BFCM.

May 8, 2020

eCommerce was 17% of U.S. shopping. Now, it's 25%.

Store closures and panic buying created a spike in demand and a move to online last month. Now, demand is starting to normalize and shopping patterns are changing. Some estimate this is the "second wave" of shopping where it's going to become clearer how sticky new shopping behaviors really are. eCommerce is up to 25% of U.S. shopping, but will it stay or will it recede?

Tesla shuts down all production worldwide

Elon Musk announced that all production has halted for Tesla. It's unclear why, but Bloomberg suggests it could be due to the complicated nature of Tesla's parts and the supply chain that supports production.

Google's fastest-growing product searches for free

Google released a new tool on Think with Google called "Rising Retail Categories". Marketers can see what product categories are growing the fastest for free. This week in the United States:

  1. Candied and chocolate-covered fruit: +80% (Happy Mother's Day!)
  2. Cocktail mixes: +70%
  3. Fresh cut flowers: +70%
  4. Taco shells and tostadas: +70%
  5. Volleyball nets: +50%

Work from home, work it out

With gyms closed, Peloton sales were 66% higher and its fitness subscriber base is up 94% YoY. Society is slowly reopening in some regions, but some habits, like creating a fitness routine outside of a gym, might be here to stay.

###

May 1, 2020

Less first-generation warehousing space in 2021.

  • Construction workers are active and on site for essential industrial real estate projects in 80%—or 16 out of 20—of the top U.S. markets for under-construction space, which represent 70% of total under-construction national inventory.
  • With some construction projects on hold, there will be less first-generation space entering the market in 2021, which could result in the overall vacancy rate falling to pre-COVID-19 levels towards the end of 2021.
  • CBRE has reduced leasing activity for the record-making 309 million square-feet under construction at the end of 2019.

Will eComm represent 25% of retail in 2020?

The growth in eCommerce we expected to take 5 years has happened, seemingly, overnight. Target’s digital sales are up 275% and Shopify sales are approaching BFCM levels ... in April.

Q1April 1-23, 2020
Total sales increase7%5%
Digital sales100%275%
Essentials and food+20%+12%
Hardlines+16%+30%
Apparel and accessories-20%-40%

Baby boom.

eCommerce is up, but especially in baby products (611%), medical essentials (434%) and cleaning supplies (210%).

Inventory is here with nowhere to go.

Industrial vacancy rates in Q1 2020 were at 4.4%. Inventory isn’t moving and capacity is running out. Industry experts are saying global container shipments will fall by 30% in the next few months if space isn’t made. U.S. container ports handled 1.51 million TEUs, a 17.0% decrease from the previous month and 6.8% lower year-over-year.

Warehouse searches are up YoY.

FLEXE data shows that warehouse search volume is up 2X YoY. The Southeast region of the U.S. increased 74% with Atlanta, GA seeing 3.5X increase. Searches for warehouses in North Carolina are up 57% and searches for New Jersey are up 28%.

Making decisions isn’t easy. Here’s why.

According to the Gartner report, “Coronavirus Requires Supply Chain Leaders to Adopt Enhanced Decision-Making Abilities”, disruptions increase the number of decisions that need to be made and 80% of supply chain professionals say decision-making could be better. Meanwhile, 76% of supply chain professionals say disruptions are increasing and 72% say they are becoming more impactful.

Recovering from COVID-19

According to a survey from Egon Zehnder, 60% of respondents believed it would take more than 3 months to recover from COVID-19 when asked in March 2020. (Egon Zehnder)