Warehouses enter the peak season in exceptional conditions this year. Unpredictable trade policy, persistent labor shortages and rising demand are converging to make fulfillment a major risk point for retailers and brands. As costs rise and consumer expectations intensify, the e-commerce warehouse is increasingly at the forefront of customer experience and margin defense.
Also read: How to find the best warehouse automation system for your budget in 2025
Each holiday season, increased demand focuses on retailers’ fulfillment operations, exposing gaps in pick/pack/ship performance, workforce planning, and inventory management. For example, increasing volumes of holiday stock overflowing warehouse shelves, coupled with physical layouts not built for speed, hinder picking efficiency and unloading productivity.
Paperwork and products get lost in the chaos, wreak havoc with inventory control, and frustrate frequent holiday shoppers if systems aren’t synchronized to update inventory in real time. Overtime costs add up quickly, and new hires struggle to make returns quickly, creating fulfillment bottlenecks. Moreover, after the peak of the return, they accumulate and become marginal.
These peak demand challenges can be disastrous for retailers, especially if they rely on manual, paper-based practices or disconnected warehouse systems. Additionally, this year’s peak season comes with unprecedented operational hurdles and scheduling complexities that may disrupt e-commerce operations for unprepared retailers.
Tenterhooks trade policy
Unpredictable tariffs and the end of the minimum exemption will hit importers hard this holiday season. According to a 2025 survey Of e-commerce leaders in the US, Canada and the UK, 99% of respondents indicated that tariffs and business changes have affected their peak planning, while seven in eight brands are raising prices to compensate for tariff costs, putting pressure on both profit margins and customer loyalty.
The evolving tariffs were affected Peak buying patterns This year, big retailers like Walmart and Target are waiting to restock domestically closer to the holidays, rather than placing large direct orders from factories months in advance. Other retailers face and deal with the space limitations of overcrowded warehouses combined with the shortcomings of spreadsheet-based inventory management processes. The end result of an intensive pick/pack/ship workflow is increased errors and fulfillment bottlenecks that can compromise customer lifetime value.
The deep cost of labor shortages
As retailers enter their busiest periods of the year, labor shortages — caused by an aging workforce, immigration restrictions and a competitive labor market — are throwing a wrench into operations, driving up costs and delaying customer shipments.
recent study found that 76 percent of supply chain and logistics leaders surveyed had experienced significant labor shortages in their operations, and 58 percent noted that labor shortages had negatively impacted customer service levels.
Similarly, a 2025 study revealed that 52% of warehouse operators rank finding a reliable and quality workforce as their top challenge. Pick/pack workers, forklift operators and shift workers are among the hardest working employees. And even if retailers and distributors can find staff during peak periods, training can be a long and expensive process, taking weeks for workers to reach initial productivity.
Warehouse optimization to manage seasonal spikes
Despite this year’s mix of predictable and unpredictable peak season challenges, retailers and distributors can take steps to cope with increased demand. Instead of relying on manual or paper-based processes, disconnected systems, and “tribal knowledge” that crumbles under the burden of increasing order volume, businesses must 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 having to double the workforce.
To successfully manage peak demand, retailers must prioritize three main areas: warehouse layout and workflow. scalable staffing and training; and forecasting, planning and inventory control. For example, small changes to warehouse layout such as installing fast SKUs near packing stations, adding pick spacing in aisles, or defining clear areas for receiving, picking, packing, shipping, and returns can save valuable time and effort.
In the area of inventory, forecasting inventory based on past and projected trends, flagging SKUs that may experience supply chain delays, and using barcodes based on inventory are simple steps to ensure that products are available and accessible when orders come in.
Some retailers may choose to hire temporary workers during the holiday season. In the midst of high order volume, if not managed well, training can become a speed bump. If the training process is manual or relies on memorization, it leaves a lot of room for error and slows down the entire team. Instead, consistent, simple, and repeatable workflows—supported by technology (eg, handheld scanners, automatic label printing)—guide workers, prevent human error, and keep orders flowing.
Spread the holiday cheer with the right technology
A scalable fulfillment process capable of handling peak demand depends on the strategic use of automation and integrated technology for warehouse management. To avoid the holiday crisis, savvy retailers are implementing AI-powered inventory management systems (IMS) that replace spreadsheets for inventory planning and demand forecasting, leverage forecast buying, and avoid overselling and underselling by synchronizing inventory in real-time. 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 buying, carrier selection, and label generation—is the bare minimum to survive peak season volume. A WMS replaces paper pick lists with barcode scanning and mobile-guided pick routes to speed up work, eliminate mis-picks and errors, and enhance the customer experience. Additionally, with integrated catalog and inventory management capabilities, retailers can centralize product inventory updates across all sales channels.
The final word
Holiday Retail 2025 Deloitte prediction Project sales are between $1.61 trillion and $1.62 trillion. With the increase in demand between November and January, Small inefficiencies magnify into major liabilities that cause retailers to stumble and compromise the customer experience—a red flag for retailers by any standard. But with exceptional tariff challenges, ongoing labor shortages, and supply chain disruptions impacting this year’s peak season, prioritizing operational efficiency in the warehouse is critical to reducing operating costs and protecting margins.
many Factors affecting retail operations are beyond the organization’s control, whether it’s evolving tariffs, inflation, geopolitical supply chain disruptions, or fluctuating consumer demand. But RRetailers and distributors who are scaling fulfillment by embracing warehouse automation and integration—along with careful attention to inventory control, staffing strategies, and warehouse layout and workflow— Can use peak periods to increase profits at a critical time.
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