Preparing for Peak Season: Why This Year is Different

As we approach the holiday season, retailers and logistics service providers (LSPs) like freight forwarders and warehouses are placing their respective orders to secure the availability of merchandise before shoppers add to their carts.

This year, the holiday consumer landscape is slightly different. With U.S. businesses gearing up to import more goods now compared to 2023, we're seeing a shift in preference for mid-range retail products.

Expected Growth in Import Volume for Peak Season This Year

With the bullish U.S. stock market and the strength of the greenback, consumers are getting more upbeat about the domestic economy. In May 2024, the U.S. consumer confidence index rose to 102, from 97 in April, marking a positive shift after three consecutive months of decline. It makes sense to expect consumer demand to rise, which would drive companies to import more goods this year — albeit just slightly due to persisting inflation worries.

Shift in Preference for Mid-Range Retail Products

However, as inflation continues to pinch wallets and job cuts being rampant, many consumers now seek value in mid-range products. Priced at mid-level, they have become particularly attractive. We saw a significant rise in freight orders for them, reflecting that they are now the new consumer price sweet spot.

Unlike previous years when high-end or discount products dominated, the current trend underscores a balanced approach by consumers who increasingly prioritize value — not sacrificing quality yet obtainable at more accessible prices. Lower bonuses this year translates to a dampened desire for luxury items, with consumers naturally trading down.

Leveraging AI to Meet the Demand for Peak Season Merchandise

For any purchase, it's critical to ensure delivery timeliness. For peak season volume, LSPs need to plan ahead to ensure the agility of logistics operations and scale-up capability. It's crucial for mid-range retailers to also plan in advance and collaborate more closely with LSPs to avoid stock-outs and delays, which will greatly impact revenue and growth.

LSPs would be wise to invest in artificial intelligence (AI) to enhance supply chain visibility, inventory management, optimize shipping routes, and pave the way for more accurate and efficient customs declaration filings. When these all come together, better decisions can be made such that errors, time and costs are greatly reduced. The result? On-time deliveries.

AI-powered software can benefit retailers in keeping up-to-date with current affairs as any movement could potentially derail the supply chain. For instance, with news of a looming East Coast port strike, U.S. retailers are now mitigating delays by balancing cargo loads between East Coast and West Coast ports. Machine learning can also improve the precision in supply and demand planning, ensuring businesses are sufficiently staffed and stocked to handle the rise in incoming loads and customer inquiries.

Monitoring Market Movements is Key

Despite the optimistic outlook for increased imports and mid-range retail demand, businesses must remain vigilant about economic uncertainties and fluctuating market conditions. Real-time data is imperative in getting a pulse of the current market, and players need to respond quickly.

Contingency plans should be developed to address potential disruptions, as consumer demand is highly sensitive to economic fluctuations. In the event of a market downturn, consumers may not only trade down to cheaper items, but might also reduce their overall spending. Therefore, it's crucial to be prepared for such scenarios.

As the holiday season approaches, retailers and logistics providers must adapt to shifting consumer preferences and economic uncertainties. Focusing on mid-range products and leveraging AI for efficiency and timely deliveries will be key. The goal is to maximize revenue, minimize costs, and keep customers satisfied in a dynamic market.

Siddharth Priyesh is vice president and head of Americas and Caribbean at CrimsonLogic, part of the PSA Group, is a global technology company driven by innovation to digitalize and simplify global trade.