6 charts show how a pandemic upended retail supply chains

The energy inside of stores in March 2020 was rushed, strained and infused with the weighty gaze of shoppers and workers that asked, “Should we even be here? Are we going to be OK?” At that point, a lot was up in the air. Sports, shopping, supply chains and society at large were changing — adapting — to the coronavirus pandemic.

Soon, stores temporarily shuttered as the result of lockdowns. And consumers flocked to digital buying channels.

E-commerce sales boom in pandemic

E-commerce retail sales, {066dbc63777e5ed549f406789d72fdeebd77a32711d57f7b38ff2b35c4ba2a42} of total sales

When stores closed and customers moved online, retailers looked for a way to get in-store inventory moving. Fulfilling online sales from retail locations was an obvious solution. And it was one that some companies were better positioned to tackle. Target, for example, has been perfecting its ship-from-store model for years.

“Ship from store, depending on the retailer, can be incredibly efficient,” said Moody’s retail analyst Charlie O’Shea. “And in Target’s case, it is because they so locally curate their stores.”

Retailers ship from store to move inventory

Count of annual or quarterly reports mentioning “ship from store”

Other retailers that largely rely on brick-and-mortar sales had to stand up infrastructure quickly to be able to handle e-commerce and ship from store.

“We expedited the infrastructure to be able to buy online and ship from store in order to supplement e-commerce fulfillment while leveraging labor that we would already have available in retail stores after they have reopened,” Build-A-Bear CEO Sharon Price John said on the company’s earnings call in June.

The effort might not have been enough to make up for Build-A-Bear’s store network: its sales fell 23{066dbc63777e5ed549f406789d72fdeebd77a32711d57f7b38ff2b35c4ba2a42} year over year to $249.2 million for the full year 2020. But e-commerce demand was up 133{066dbc63777e5ed549f406789d72fdeebd77a32711d57f7b38ff2b35c4ba2a42} year over year.

“​We were able to support this growth through our efforts of improving throughput in our warehouse, accelerating omnichannel initiatives in … our last-mile delivery, including buy online, pick up in store or ship from store programs,” Chief Financial Officer Voin Todorovic said this month.

Whether this strategy will stick around after the pandemic is up for debate.

“I think every retail analyst right now is kind of scratching our head trying to figure out what’s next,” O’Shea said, adding that no one knows what normal will look like going forward.

Retailers move to the curb

Count of annual or quarterly reports mentioning “curbside pickup”

The other option for shuttered retailers was to get customers to pick up at the curb. This simplifies the supply chain for the retailer compared to ship from store — and is cheaper for the retailer.

Bed Bath & Beyond, Dick’s Sporting Goods and Hudson’s Bay were among the retailers utilizing the curb as a result of the pandemic. But there are questions about how companies will shift and improve these offerings going forward.

“I think … retailers are going to focus on this sort of whole curbside thing, trying to make that experience not just painless, but actually enjoyable,” said Dave Gill, vice president of insights and analytics at Rakuten Intelligence.

More shoppers choose to pick up orders

Order for pickup as {066dbc63777e5ed549f406789d72fdeebd77a32711d57f7b38ff2b35c4ba2a42} of all buyers

Retailers experienced demand for these omnichannel offerings. Grocers have highlighted the success of their curbside programs months into the pandemic.

“More than 50{066dbc63777e5ed549f406789d72fdeebd77a32711d57f7b38ff2b35c4ba2a42} of our BOPIC orders for the fourth quarter were delivered curbside,” BJ’s Wholesale Club CEO Lee Delaney said on the company’s earnings call this month, referring to the retailer’s buy online, pick up in club option.

While retailers have seen benefits from the e-commerce pivot, it wasn’t easy. Amazon, which had, arguably, the most mature e-commerce supply chain, struggled to keep up with demand in the early days of the pandemic, according to figures from Rakuten. (It is worth noting that these figures are an average that includes marketplace sellers for which Amazon doesn’t control the supply chain.)

Amazon’s network struggles to keep up

Click to ship and click to door, measured in days

The increased ship and delivery times highlight some of the labor challenges Amazon had in the early days, Gill said. The company did eventually bring on hundreds of thousands of workers to bolster its ranks.

“People that work in Amazon warehouses got sick, and went home and called in sick,” Gill said. “So they actually had sort of a compounded problem in that they’re trying to fulfill all this demand and their workforce, which is gigantic, was pretty hard hit by all that stuff.”

Amazon’s orders start showing up late

Percentage of Amazon orders arriving late

The slowdown in Amazon’s network resulted in an uptick in late shipments, but the retailer has seen these figures largely recover. Some areas have already seen a return of one-day shipping.

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