Rising Cost Of Living Effects Retailers’ Excess Stock
* Two thirds (68%) of shoppers are ‘worried’ about being able to afford to buy gifts for the festive period;
* 6 in 10 US shoppers (64%) will be relying on retailers to discount goods in order to afford what they need this holiday season;
* 24% of households plan to set a strict budget, 26% will minimize travel to save on fuel, and 23% will be ditching the wrapping paper;
* Findings come from a new poll of 2,000 shoppers from Inventory Planner, which provides forecasting and planning software for businesses;
* 54% of retailers say there will be ‘dangerous ramifications’ for their business if they fail to shift excess stock ahead of New Year;
* Inventory Planner’s Sara Arthrell said: “With more than a quarter of consumers cancelling Christmas this year, many retailers could be facing a nightmare in the New Year being stuck with excess stock and a recession looming. That is why good planning is vital.”
Christmas is cancelled for more than half of consumers (52%) because of the cost of living crisis – leaving retailers facing a nightmare New Year stuck with excess stock.
* 6 in 10 shoppers (64%) are ‘worried’ about being able to afford to buy gifts for the festive period.
* And 15 percent of households plan to spend less this year than they did last year.
The findings come from a new poll of 2,000 shoppers from Inventory Planner, which provides forecasting and planning software for businesses.
They provide a stark warning to retailers about the dangers of being caught with excess stock.
More than half of the 500 merchants polled (54%) told Inventory Planner there would be ‘dangerous ramifications’ for their business if they failed to sell excess stock ahead of Christmas.
Inventory Planner’s findings showed how strict budgeting by consumers will hit retailers this holiday season.
The survey found that households were looking at lots of ways to limit spending.
The most popular way was to minimize travel to save on fuel and other travel costs such as rail – chosen by 26% of respondents.
Almost a quarter of those polled (24%) plan to set a strict budget, and 23% will be ditching the wrapping paper to make the holiday season more affordable.
Other popular cash savers include buying discounted items (24%), doing home-made gifts (22%), switching to cheaper Secret Santa presents (22%), going without a Christmas tree (17%), and not using wrapping paper or seeking cheaper alternatives such as old newspapers (23%).
One in five households (21%) will ask guests to make a contribution to the cost of Christmas dinner.
Almost one in five (18%) of those polled are working extra hours to save up for the holiday season Christmas and 17% have taken a second job.
Inventory Planner CMO Sara Arthrell: “With more than a quarter of consumers cancelling Christmas this year, many retailers could be facing a nightmare in the New Year being stuck with excess stock and a recession looming. That is why good planning is vital.
“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.
“It’s also dangerous for cashflow. With tough times ahead, cutting stock is a crucial strategic move for all brands, but deep discounting is not the optimal way to boost cash reserves – even though it is tempting to do so because shoppers want deals right now.”
Arthrell said brands need to implement inventory planning technology so that they can identify the hottest sellers and discount only the slow movers.
“Some brands which have failed recently such as Made.com made the mistake of thinking that Pandemic fuelled demand would be permanent.
“During the Covid crisis, some brands could not get their hands on enough inventory and were overbuying to compensate – that’s put them in a tricky situation, as consumer spending has dropped, many have found themselves sitting on mountains of surplus inventory they can’t shift.
“That’s where technology comes in. Inventory planning provides accurate replenishment recommendations based on years of purchasing data so you are never under or overbought on inventory.”