E-commerce has made a huge impact on how companies do business on both sides of the Canada-USA border. The pandemic has only increased consumers’ dependence on online shopping. With borders closed to non-essential travel and shelter-at-home orders initiated on both countries, shopper demand has created a ripple effect resulting in dramatic shifts in order fulfillment, inventory control and warehouse management.
Cross channel or ‘omnichannel’ retailers in particular find themselves well positioned to meet this increased demand. With their customers homebound, retailers cater less to onsite patrons converting their store shelves into storage for filling (local) delivery orders and/or curbside pickups.
Walmart is projecting to see a 44% increase in their 2020 US e-commerce sales. Its president, Doug McMillon said since mid-March, “The number of new customers using pickup and delivery had increased fourfold.” With its well established brick and mortar ‘footprint’, Walmart easily made the shift to meet the demands of its (local) online consumers (Source).
Supply chains have long utilized “just in time” (JIT) inventory management to minimize wasted space and reduce inventory costs. However, according to U.S. commercial real estate company, CBRE, companies impacted by border closures and ‘supply disruptions’ are moving away from overseas ‘low-cost production models’ and JIT inventory methods to reduce risk to “their business’ supply chain continuity.” This shift means more dependence on domestic distribution hubs and fulfillment centers. (Source)
Canada – U.S. Retail Forecasts
Should the ‘coronavirus peak this summer’, CBSE predicts U.S. federal stimulus money in combination with ‘pent-up private demand’, “could help the U.S. economy return to growth by year-end and drive stronger than previously expected growth in 2021.” Export Development Canada (EDC)’s chief economist, Peter Hall predicts Canadian online sales will continue to increase and ‘traditional retailers’ – hit hard by Covid-19, “won’t go without a good, creative fight.” Hall echoed CBSE saying, “It’s equally important to realize the accumulation of pent-up demand over the shutdown period … It’s clear that for those who are still earning, money is piling up in the bank account, and is one of the brightest signals of potential demand as economies get back up and running again.”
As businesses begin to re-open and cash flow increases, e-commerce will continue to play a large economic role in Canada-US cross-border trade recovery.
Read CBSE’s full U.S. Retail Figures Q1 2020 report here >>>
Read Peter Hall’s Weekly Commentary, “Is COVID-19 the biggest test yet for the retail sector?” here >>>