Half of UK Retailers Fear They Will Be Forced to Slash Prices Before Christmas Due to Downturn in Consumer Spending
Contributed by Brightpearl.
A poll of 250 retailers found 45 per cent have surplus goods they’re desperate to offload – with fashion, toys and gifts, baby and toddler the sectors struggling the most being
And 59 per cent of those in this situation admit there’ll be ‘dangerous’ ramifications for their business if they fail to sell off their excess stock.
A quarter (25 per cent) have already started to suffer – having been forced to write off excess stock as a loss this year.
In addition to slashing the prices of products, retailers are likely to resort to offering freebies with other purchases, bundling products together, and even give away unwanted items.
But while this is a major concern for many businesses in the retail industry, major price cuts will likely be music to the ears of consumers in the wake of the ongoing cost-of-living crisis.
Further research of 2,000 adults who celebrate Christmas – also commissioned by Inventory Planner – found 41 per cent are ‘depending’ on businesses to discount goods ahead of the festive period.
Nick Shaw, a spokesperson for the inventory forecasting and planning software for businesses, said: “Having excess stock is a problem because products start to decrease in value after a while.
“Among other things goods can start to deteriorate and perish – go out of fashion, become redundant and more. Excess stock also means businesses have less room to fill their warehouses with new stock – goods which might be in demand – as well as less cash to buy new goods.”
The study also found retailers with excess stock estimate their surplus to make up 19 per cent of their overall stock holdings – with the value of this at almost £66,000.
Understandably, 59 per cent are concerned about the ramifications of this on their firm’s cash flow. As such, 45 per cent fear they’ll be left with no choice but to liquidate much of their superfluous goods. And this is not a decision they’ll be taking lightly – 55 per cent admitted it will be ‘difficult’ for them to absorb the loss of liquidation – or for them to write off excess stock or mark down prices.
Part of the reason for this worryingly common plight for retailers is how difficult it is for owners to predict customer demand and sales in what’s described as a fluctuating market.Of those with excess stock, 70 per cent admitted it’s practically impossible for them to know how much stock they’ll need in the coming months. This uncertainty is likely to have been caused in part by unsuccessfully attempting to forecast demand during the pandemic.
With 62 per cent admitting pandemic-inflated online demand was a major factor behind purchasing excess stock in the first place. However, 41 per cent of all retailers polled intend to take steps to fix inventory planning issues ahead of the holiday season. Such measures include trying new product lines, internal processes such as more stock checks, and ordering less stock. While 17 per cent are looking to investment in technology systems which will help optimize stock replenishment and planning.
Inventory Planner’s Nick Shaw added, “keeping track of stock – knowing when to replenish goods and when not to, can prove to be very complex. And this process is only made harder by what’s been happening in recent years – whether that’s the pandemic or the cost-of-living crisis.”