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Warehouses are heading into peak season this year under exceptional circumstances. Unpredictable trade policy, persistent labor shortages, and demand spikes are converging to make fulfillment a significant risk point for retailers and brands. As costs rise and consumer expectations intensify, the ecommerce warehouse is increasingly the frontline of both customer experience and margin defense.
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Every holiday season, surges in demand shine a spotlight on retailers’ fulfillment operations, revealing the cracks in pick/pack/ship performance, workforce planning, and inventory management. For instance, increased volumes of holiday stock overflowing on warehouse shelves, in conjunction with physical layouts not built for speed, hinder picking efficiency and drain productivity.
Paperwork and products get lost in the chaos, wreaking havoc with inventory control and, if systems aren’t synced to update inventory in real-time, frequent stockouts frustrate holiday shoppers. Overtime costs quickly add up and new hires struggle to become productive quickly, creating fulfillment bottlenecks. Plus, post-peak returns pile up and eat into margins.
These peak demand challenges can spell disaster for retailers, especially if they’re relying on manual paper-based practices or disconnected systems in the warehouse. Additionally, this year’s peak season is accompanied by unprecedented operational hurdles and planning complexities that may upend ecommerce operations for unprepared retailers.
Trade Policy Tenterhooks
Unpredictable tariffs and the end of the de minimis exception are hitting importers’ bottom lines hard this holiday season. According to a 2025 survey of ecommerce leaders in the U.S., Canada, and the UK, 99% of respondents indicated that tariffs and trade shifts influenced their peak planning, while seven in eight brands are raising prices to offset tariff costs, putting pressure on both margins and customer loyalty.
Evolving tariffs influenced peak buying patterns this year, with major retailers such as Walmart and Target waiting to restock domestically and closer to the holidays instead of placing large direct orders from factories months in advance. Other retailers frontloaded and are dealing with space constraints of warehouses packed to the brim with stock, coupled with the shortcomings of spreadsheet-based inventory management processes. The end result is a strained pick/pack/dispatch workflow, increased errors, and fulfillment bottlenecks that can compromise customer lifetime value.
The Deep Cost Of Labor Shortages
As retailers enter their busiest period of the year, the labor shortage — driven by an aging workforce, immigration constraints, and a competitive labor market — is throwing a wrench into fulfillment operations, driving up costs and delaying customer shipments.
A recent study found that 76% of the supply chain and logistics leaders surveyed have experienced notable workforce shortages in their operations, with 58% noting that labor shortages have negatively impacted customer service levels.
Similarly, a 2025 study revealed that 52% of warehouse operators rank finding reliable, quality labor as their top challenge; pick/pack workers, forklift operators, and shift leads are among the most difficult to staff. And even if retailers and distributors can find staff during peak periods, training can be a lengthy and costly process, taking weeks for workers to reach baseline productivity.
Optimizing The Warehouse To Manage Seasonal Spikes
Despite the mix of predictable and unpredictable peak season challenges this year, there are steps retailers and distributors can take to weather the spike in demand. Instead of relying on manual or paper-based processes, disconnected systems, and “tribal knowledge” that crumble under the weight of surging order volumes, businesses need to optimize warehouse operations for scalability.
Peak season warehouse optimization — the process of configuring the warehouse to handle temporary spikes in order volume, without compromising speed, accuracy, or customer satisfaction — enables the warehouse team to scale fulfillment, increasing throughput to handle the avalanche of holiday orders without needing to double the workforce.
To successfully manage peak demand, retailers need to prioritize three primary areas: warehouse layout and workflow; scalable staffing and training; and inventory forecasting, planning, and control. For example, small changes in warehouse layout such as staging fast-moving SKUs near packing stations, adding pick face breaks in aisles, or defining clear zones for receiving, picking, packing, dispatch, and returns can save valuable time and effort.
On the inventory front, forecasting inventory according to past and projected trends, flagging SKUs that may face supply chain delays, and utilizing barcode-based inventory put-away are simple actions that ensure products are available and accessible when orders start pouring in.
Some retailers may elect to hire temporary workers during the holiday season. Amid high order volumes, training can become a fulfillment speedbump if not well managed. If the training process is manual or relies on memorization, it leaves too much room for error and slows down the entire team. Instead, consistent, simple, and repeatable workflows — supported by technology (e.g., handheld scanners, automated label printing) — will guide workers, prevent human errors, and keep orders flowing.
Spreading Holiday Cheer With The Right Tech
A scalable fulfillment process capable of handling peak demand is dependent on the strategic use of automation and integrated technology to manage the warehouse. To prevent a holiday meltdown, savvy retailers are implementing AI-enabled inventory management systems (IMS), which replace spreadsheets for inventory planning and demand forecasting, take advantage of predictive purchasing, and prevent overselling and underselling with real-time inventory syncing. By integrating sales channels with an order management system (OMS), companies can organize and easily process all orders from a single platform.
Deploying a warehouse management system (WMS) — integrated with multi-carrier shipping software to automate rate shopping, shipping service selection, and label generation — is the bare minimum for surviving peak season volumes; a WMS replaces paper pick lists with barcode scanning and mobile-guided picking routes to increase fulfillment velocity, eliminate mis-picks and mis-ships, and enhance the customer experience. Plus, with integrated catalog and listing management capabilities, retailers can centralize the update of product listings across all sales channels.
Final Word
Deloitte’s 2025 holiday retail forecast projects sales between $1.61 trillion and $1.62 trillion. As demand spikes during the November to January timeframe, small inefficiencies will be magnified, becoming large liabilities that cause retailers to stumble and compromise the customer experience — a red flag for retailers by any standard. But given the exceptional tariff-driven challenges, ongoing labor shortage, and supply chain disruptions impacting this year’s peak season, prioritizing operational efficiency in the warehouse to reduce operating costs and safeguard margins is especially vital.
Many factors influencing retail operations are outside an organization’s control, whether evolving tariffs, inflation, geopolitical-driven supply chain disruptions, or fluctuating consumer demand. But retailers and distributors that scale fulfillment by embracing automation and integration in the warehouse — in tandem with careful attention to inventory control, staffing strategies, and warehouse layout and workflow — can capitalize on peak periods to boost the bottom line at a crucial time.