Supply chain stories to watch this holiday season

It’s shaping up to be another eventful and unpredictable holiday season, as consumer sentiment and geopolitical conditions continue to fluctuate wildly in the days and weeks leading up to Black Friday.

Consumer sentiment is hovering near the lowest level ever recorded, but spending remains strong. Gas prices have been climbing since the start of the Iran War, and can see wild fluctuations in a matter of days if there’s a sudden development, like a crucial pipeline being damaged. 

In turn, retailers still don’t quite know what type of consumer environment they’ll be facing come November and December. Even though most retailers have already received their holiday inventory at this point, a challenged consumer environment could create supply chain complications in terms of how consumers want to receive their products. 

Here are three of the biggest supply chain stories I’ll be watching this holiday season

How high gas prices shift what and where people buy 

Rising gas prices, of course, are the biggest achilles heel retailers will face this holiday season. First and foremost, gas prices will determine how much consumers are willing to spend. Right now, many surveys are indicating that holiday spending will hold steady this year. 

For example, a PwC survey found respondents plan to spend, on average, $708 on holiday gifts this season, down 2% from $721 last year. 

Another factor to watch is how gas prices affect how people buy their gifts. Historically, brick-and-mortar reigns supreme in holiday shopping. According to an ICSC survey, nearly all shoppers (93%) plan to visit a store for holiday shopping. But rising gas prices may lead them to consolidate trips or shop more online than they normally would. 

New delivery methods face a crucial test

Every September and October, it seems every major brick-and-mortar retailer announces a new partnership with a same-day delivery company or a new delivery option, and this year is no exception.

Walmart, for example, introduced a 1-hour express delivery service that will roll out nationwide ahead of Thanksgiving. Costco announced new partnerships with DoorDash and Uber Eats, giving people more options than ever to shop from the club retailer without visiting one of its gigantic warehouses. DoorDash also announced a number of new retail partners ahead of the holidays, including Macy’s, Anthropologie and Vans. 

This will also be the first holiday season that many delivery platforms roll out new AI list-building features, which they likely hope will upsell shoppers. In September, Instacart unveiled its AI assistant called Clemintine, and the same day, Shipt launched its own “Ask Shipt” assistant. DoorDash rolled out a shopping assistant that operates via text message, while Walmart has had its Sparky assistant for just over a year now. 

I’ll be curious to see whether any of these new delivery options — or AI assistants — get any shoutouts during fourth-quarter earnings calls as significant drivers of holiday sales.

How DoorDash changes the crush of holiday returns

Speaking of delivery platforms, this will also be the first holiday season that DoorDash returns is in play. In September, the company announced that it was piloting DoorDash returns, with a nationwide rollout expected in September, just in time for the holidays. 

Consumers pay a $7.99 fee to schedule a return, and a Dasher will stop by their door in as soon as 30 minutes to pick it up and initiate the return. 

Of course, not everyone will want to pay a fee to initiate a return. But considering that more and more retailers are now charging restocking fees anyway, I’m guessing some time-pressed shoppers will fork over the fee without thinking twice about it. And I’ll be curious to see how this eases the crush of holiday returns, if at all, during a time of year when around 17% of merchandise is returned. 

What we’ve covered

How Amazon Fall Prime Day went for sellers

Amazon’s Prime Big Deals Day, held on October 6 to 7, was an early key test of holiday demand. The good news is that shoppers showed up, and they bought more than just essentials. Modern Retail’s Gabriela Barkho interviewed a few sellers about how the event went — and overall, it went positively for both beauty and apparel brands. They said that shoppers responded especially positively to product bundles. 

‘Plastic-free’ is the new battleground in coffee makers 

In response to consumer concern over waste and microplastics, companies are now racing to release new coffee makers that rely on little to no plastic. Earlier this month, Keurig finally made its Keurig Alta brewing system available for purchase (albeit on a pre-order basis), which replaces its ubiquitous K-Cups with a compressed puck of coffee grounds that doesn’t utilize any plastic or aluminum. Lavazza released a similar single-serve brewing system in the U.S. earlier this year, while Caraway released its own plastic-free drip coffee maker in September. 

What we’re reading

• Walmart adds one-hour express pickup ahead of the holidays – Adweek 
• Nearly half of holiday shoppers are worried about affording gifts this year – Retail Dive 
• New York Fed says tariffs responsible for nearly 3% price hikes on popular products – Sourcing Journal