How retail stores and e-commerce are getting ready

The consumer continues to look healthy and the supply chain has regained stability as the holiday shopping season begins.

That’s according to DHL Supply Chain’s new CEO for North America, Patrick Kelleher, who told CNBC the shipping company is seeing more promotional items make their way out of warehouses and to retailers, but not in a signal of increased consumer weakness compared to the prior year.

“Across the board, we are seeing volumes very similar to what we’ve seen in past years, especially last year,” said Kelleher.

Freight is considered a forward-looking indicator of a retailer’s expectations of the consumer, and Kelleher said more promotional items have left or are leaving warehouses and filling store shelves, but he added, “I think it’s very consistent from what we’ve seen in past years in terms of the combination of retailers’ engagement of promotional strategies around particular product categories, sell-through of their core offerings. We don’t see a big shift there.”

This week, the National Retail Federation forecast that winter holiday spending would grow between 2.5% and 3.5% over 2023, consistent with its annual sales forecast, and reaching as high as $989 billion in total holiday spending in November and December, slightly above last year’s level.

Amazon recently announced its plan to hire 250,000 additional workers for the holiday season, the same seasonal hiring level as last year.

But there is at least one big change behind the scenes this year, Kelleher said, with retailers’ changing their approach to e-commerce delivery around big shopping events like Black Friday and Cyber Monday. “Typically, in the past, the expectation was to ship the same day or next day, but now there is appetite to level that volume out over a few days,” he said.

Kelleher said that spreading out the volume of packages moved out of a warehouse allows a company to reduce the amount of labor required.

“This will achieve some cost efficiencies in getting that volume out because of inflation and cost,” he said. “There are cost and margin pressures out there, so there are ways to profitably deliver peak season with few changes like that.”

It means items would arrive a day or two later than in years past, but Kelleher said in most cases it won’t appear to the consumer as a delay because shippers are clearly communicating delivery expectations in line with the shift.

“So typically, Cyber Monday is a heavy volume day,” Kelleher said. “As we can extend some of those orders…