“Peak” season is the busiest time of year for businesses. For e-commerce and retail businesses, peak runs from August through the holiday season. For packaging companies like Premier, our manufacturing peak begins in September and runs through December, with an uptick in mid-January as people return gifts they received during the holidays or use gift cards to buy more.
During the pandemic, with e-commerce booming, the packaging industry’s peak was crazy busy. If you remember, demand and supply chain issues led to retail inventory shortages in 2020 and 2021. To combat the supply chain issues, businesses built up their inventories. Unfortunately, steep inflation caused consumers to cut their spending in 2022, causing a glut of retail inventory and peak to be flat.
Will peak be different in 2023?
“While prime week (shared by many online retailers) was less than projected, all indicators remain pointed towards a decent retail peak this year,” said Chris Winfield, Premier’s Vice President of National Accounts. “We are beginning to see 13 to 20-week forecasts from our clients with promising projections. Pre-peak meetings seem mostly positive on achieving strong year-end results.”
One reason: A lower inflation rate means consumers’ dollars are going further. The U.S. inflation rate was 3.2% in July, compared to 9.1% a year ago. With consumers having greater purchasing power than last year, businesses are already seeing positive trends in orders for products such as back-to-school items.
Also, while the rate of e-commerce growth has slowed—from highs of 26.7% in 2020 and 16.8% in 2021 to 7.1% in 2022 (a culprit being inflation)—e-commerce is still growing. Insider Intelligence’s Global Retail E-Commerce Forecast 2023 predicts an 8.9% growth rate for e-commerce this year, meaning many of us will continue to see packages delivered to our doorstep.
Compared to last year, inventories have gotten leaner, allowing retailers to control costs and protect their margins. Likewise, an improved supply chain means goods are shipping faster and arriving earlier than a year ago.
“Merchandise inventory hangovers seem to have mostly subsided,” Chris said. “New products are coming in at a growing pace with fuel, domestic, and container load costs staying in check.”
Of course, changing economic situations or world events such as political upheaval or natural disasters could change these trends at any time. Premier reviews and monitors these trends and our customers’ activities and needs to forecast monthly. “We will have a much stronger outlook about peak by the end of August,” Chris said.