As retailers and their suppliers gear up for the crucial peak season, they face a gauntlet of complex challenges between them and year-end revenue targets. From potential port strikes to increased transportation costs to geopolitical tensions, companies must navigate a volatile environment while striving to meet consumer demands and drive growth.
Today’s market is heavily influenced by persistent inflationary pressures, which have begun to stabilize but continue to impact consumers still grappling with the lingering effects of higher prices. The upcoming election season further amplifies this inflationary environment, with economic concerns taking center stage in political discourse.
While those external challenges may force retailers to go off-track, different segments of the retail sector are undergoing their own transitions. According to Gartner, a CEOs’ biggest priority is growth, and companies are trying various ways to accomplish that. Inflationary price increases initially provided some respite, but this buffer is diminishing, pushing businesses to seek new avenues for expansion.
Traditional retail channels are losing ground to omnichannel competitors, compelling companies to rethink their strategies for driving stock share growth and revenue. According to HFS Research, more than 70% of consumer packaged goods (CPG) companies are carving out direct-to-consumer options, diversifying the avenues they can take to reach end consumers.
There’s a resurgence in mergers and acquisitions. This move toward consolidation reflects the industry’s push for growth through strategic partnerships and market expansion.
The omnichannel challenge remains a persistent issue, with its complexity varying across different markets. Influencer marketing plays a crucial role in China, while Latin America grapples with a highly fragmented retail landscape. Europe, on the other hand, is seeing low-cost discount retailers gaining significant traction. These geographic variations underscore the need for tailored strategies for local market dynamics.
A range of strategies
Traditionally, retailers have put most of their eggs in the “peak season” basket, hoping a sales surge will make their year. While there is still an effort to optimize supply chains to ensure peak-season success, retailers are also exploring other growth options.
They are seeking to create more effective promotions during peak demand periods. Machine learning (ML) can help planners determine if the promotions being created are driving incremental lift or simply subsidizing baseline volume. ML can also provide intelligence on items that need secondary display to avoid out-of-stocks during periods where store labor is very constrained.
Simultaneously, there’s a growing emphasis on socially responsible, healthy, and organic products, reflecting changing consumer preferences. This shift drives product development and marketing innovation as companies strive to meet evolving consumer demands. The rollout of many new items in these categories puts pressure on shelf space and triggers the need to reduce less productive items.
Another significant trend is the shift toward private label products, particularly with inflation tightened consumer spending. According to Circana, sales of private brands increased 6% last year and surpassed $217 billion in sales in the U.S. market. This presents challenges and opportunities for established brands, that must now compete with often lower-priced alternatives while also exploring possibilities in the private label market to serve the value-conscious consumer.
Also, the trend of new digital-native companies entering the marketplace will likely continue. Driven by the increasing costs of traditional retail, these new entrants are leveraging direct-to-consumer models and innovative approaches to carve out their niche in the market.
Of course, a retailer is only as good as its supply chain, which can make or break a peak season. If you’re a candy manufacturer and can’t meet the Halloween rush, that will significantly affect the bottom line of both parties. Peak season execution is requiring a higher level of interdependence as the market consolidates.
Supply chain as a mechanism for growth
Forward-thinking retailers and their suppliers are transforming their supply chains from cost centers into powerful engines for growth and competitive advantage. This shift is particularly crucial for peak seasons in an uncertain market.
Central to this transformation is the modernization of supply chain platforms that are capable of ingesting outside-in demand and supply signals. Legacy systems will give way to integrated, cloud-based solutions that provide end-to-end transparency and real-time decision-making capabilities. These modern platforms enable companies to sense and respond swiftly to market changes, optimize operations, and drive profitable growth.
Artificial Intelligence (AI) and ML are increasingly vital in demand shaping and forecasting. By analyzing vast amounts of data from various sources — including historical sales, social media trends, and economic indicators — AI-powered systems can predict demand patterns with unprecedented accuracy. This capability is especially valuable during peak seasons, allowing companies to fine-tune their inventory levels and avoid costly stockouts or overstock situations.
Supplier collaboration has taken on new importance in the current environment, too. Companies are moving beyond transactional relationships to form strategic partnerships with their suppliers. Advanced supply chain platforms facilitate this collaboration by providing shared visibility into inventory levels, production schedules, and demand forecasts. This transparency enables more efficient planning and execution, reducing lead times, buffer stocks, and improving responsiveness to market changes.
Another key focus area is optimizing sourcing routes and transportation networks. This optimization extends to the last mile, with retailers increasingly viewing their stores as fulfillment centers to meet the demands of omnichannel shoppers.
Investing in agile and resilient supply chain technology is no longer optional — it’s a competitive necessity. Companies that can quickly adapt their supply chains to changing market conditions are better positioned to seize growth opportunities and mitigate risks. This agility is particularly crucial during peak seasons when the stakes are highest.
The upcoming peak season will be a litmus test for retailers. With inflation waning, there’s an opportunity for companies to recalibrate their strategies beyond mere price adjustments and capture market share at a time when growth is the highest priority.
