Predicting the future is a risky activity at the best of times. And right now, with all the disruption created by COVID-19, it feels doubly hard to say exactly how the next year will play out. In fact, one of the lessons of the last twelve months is how difficult it is to anticipate the world we live in. Surprises, good and bad, are inevitable.

That said, post and parcel organizations need to plan for the year ahead. And that means making a best guess of how consumer and business behavior will change (or stay the same) in 2021—and assessing what impact that will have on delivery volumes and capacity.

So what can we realistically say about next year and how to be prepared for whatever 2021 has in store for us?

No quick return to brick and mortar

First, we need to accept we may be only partway through this period of pandemic disruption. Many countries around the world have been experiencing second or third waves of infection this Fall. And while amazing progress is being made in developing COVID-19 vaccines, any rollout will likely take time to bear fruit.

So those hoping for a return to “normal” in 2021 are likely to be disappointed. In most countries, ongoing social distancing restrictions mean ecommerce channels will continue to dominate. Store footfall will almost certainly remain lower than pre-pandemic levels—significantly so for non-essential and luxury retail.

And that’s before you even start thinking about how long it will take consumers to feel confident about congregating in busy places again. For example, research into five key cities this year showed there were only modest increases in footfall after the first COVID-19 lockdowns ended. In some places, footfall even fell post-lockdown.

This strongly implies that consumer behavior is governed by more than just what the law does and does not permit them to do. And when you think about it, that’s not really surprising. The in-store retail experience has been fundamentally changed by COVID-19. After years of retailers emphasizing the experiential side to shopping, consumers suddenly have to contend with a whole host of sanitation requirements and other limitations. Understandably, many simply want to get in and out as quickly as possible—or avoid the experience entirely by shopping online.

Catering to a much broader base of ecommerce customers

The upshot is that delivery organizations should expect elevated levels of ecommerce to continue well into 2021. In fact, after this year’s holiday season peak (which I wrote about last month), the new year should see ecommerce volumes staying around 25 to 35 percent higher than the previous January. What’s more, this elevated level will likely set the baseline for the whole of next year.

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It’s important to understand this is not just about more goods being bought online—you’ve also got far more people doing the buying. The pandemic has broadened the ecommerce customer base across virtually all retail sectors and consumer demographics.

 

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We can all probably cite our personal experience of this. In my own case, I think of my parents: in their mid-70s and living in rural Utah. My mom in particular would have been fifth from the last person in the whole world to do her grocery shopping online. But the pandemic changed that. And now she hardly ever goes to the grocery store. Ecommerce has become a part of her daily life.

Get ready to lead with impact in the next twelve-months

Scale that experience up across millions of similar consumers, and you can get a sense of just what a fundamental shift in behavior has taken place. All of this points to a key imperative for delivery organizations: You need to prepare for a year of 30 percent higher capacity. And you need to do that preparation now, because higher volumes mean the opportunity of improved unit economics across the board. So the path to drop density is much easier—and there are lots of competitors in the market right now who will step up to meet demand if you don’t.

The good news is that the steps taken now to manage the upcoming holiday season will stand the organization in good stead for the year that follows. That means small-scale automation and better data analytics, as well as flexible options like local-to-local delivery—all of which I explained in my previous holiday season post.

I’ll dive into these and other options for flexible delivery capacity in more detail in a future blog post. What is clear is this will remain a very dynamic market next year and we have yet to arrive at the new normal.

 

The views and opinions expressed in this document are meant to stimulate thought and discussion. As each business has unique requirements and objectives, these ideas should not be viewed as professional advice with respect to the business.

Brody Buhler

Managing Director – Consulting, Post & Parcel

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