First, COVID-19 triggered supply chain disruptions. Then inflation surged, interest rates climbed, and consumers shifted spend from durable goods back toward services, consumables, and travel. Geopolitical conflicts in Ukraine, Israel, and elsewhere added further disruption. Now, tariffs could increase costs for consumers, drive inflation again, and reduce consumer spend. And that macroeconomic risk creates even higher uncertainty.
As a result, retail and logistics leaders face two critical decisions: do they retreat, cut costs, and hope to ride out the storm or invest into uncertainty? And if they invest, where?
Luckily, history provides guidance.
During the 2000 dot-com bust, Steve Jobs chose not to do layoffs at Apple and instead increased research and development budgets “so that we would be ahead of our competitors when the downturn was over.” Apple deployed the same strategy in 2008 during the financial crisis and released the iPad two years later.
When inflation increased in 2022 and 2023, Walmart invested in price management and eCommerce delivery enhancements that earned and retained an entirely new set of customers.
“History tells us that when we lean into these periods of uncertainty, Walmart emerges on the other side with greater share and a stronger business,” said Walmart executive VP and CFO John David Rainey.
According to Harvard Business Review, companies that “reduce costs selectively by focusing more on operational efficiency than their rivals do, even as they invest relatively comprehensively in the future by spending on marketing, R&D, and new assets” have the highest probability (37%) of any group to re-accelerate post-recession growth.
The answer whether to cut or invest is clear: invest.
But where, specifically? The obvious place to invest is in customer experience and operational efficiency. 85% of consumers won't return after just one poor delivery experience. And since consumer spend threatens to contract, every customer experience matters more than ever. In fact, Amazon built its $2 trillion dollar business on the same, simple idea: customer expectations always increase, prioritize exceeding them.
Thankfully, retailers don’t need to make Apple-, Walmart-, or Amazon-sized investments to compete during and after turbulent economic periods. They can consider incremental investments in areas with outsized potential impact. Given eCommerce sales have grown 9% annually and delivery costs, visibility, and optionality drive shopping cart conversion, the last mile is a natural place to improve.
Expect retail leaders to invest in one or more of the following last-mile strategies:
- Automated carrier selection: Intelligent order allocation systems assign deliveries based on the most cost-effective and reliable carrier (via real-time factors like location, performance, and capacity), which reduces delivery costs and ensures consistent customer experiences.
- Visibility: Delivery scheduling and transparent tracking provides customer control and predictability, which directly improves satisfaction.
- Operational flexibility: Decentralized fulfillment, such as micro-fulfillment centers reduce dependence on vulnerable global supply chains, shorten delivery times, and lower long-term costs.
- Customer-centric returns: Personalized return processes enhance customer satisfaction, and convert returns into opportunities for loyalty vs. sources of frustration.
These strategies aren’t just operational enhancements—they drive meaningful business outcomes. Retailers that improve their last-mile experience achieve higher customer engagement, better conversion rates, and more repeat purchases. These increase customer lifetime value. Operationally, a better last-mile increases deliveries per hour, minimizes miles traveled, and lowers redelivery rates, all of which reduce the cost per delivery and improve margins.
Economic uncertainty or not, consumer expectations go up and delivery promises must be upheld. Retailers that delay customer experience investments risk losing shoppers today, and paying far more to win them back tomorrow, if they can at all. Conversely, companies that selectively reduce operating expenses and invest in improved delivery experiences today will stand out. They will not only expand customer loyalty but emerge stronger, more responsive, and face fewer competitors once the dust settles.
