Inventory challenges and disrupted supply chains combined with reduced consumer spending could have big impacts on Q4
As markets continue to struggle and rising inflation persists, Flintfox, the intelligent pricing specialist, has unveiled new research which finds that, heading into the peak holiday shopping season, more than half (57%) of US retailers have concerns about the business’ financial performance. A similar number (56%) are worried about the impact of lower consumer spending on the bottom line. The new research, conducted by YouGov in October seeks to understand the impact of ongoing market challenges on retailers and their preparations for peak season.
“Disrupted supply chains, inventory challenges and surplus stock issues have created the perfect storm over the last few years, and now retailers have the added challenge of consumers reining in their spending,” said John Moss, chief executive of Flintfox. “With ongoing economic turmoil and inflationary pressures, it’s unsurprising that many retailers are feeling apprehensive about their profitability as we head into peak season.”
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Reflecting the widespread concerns about the difficulty of finding the correct inventory mix, half of respondents said they were worried about inventory challenges (47%), and a third (30%) said surplus stock. With supply issues continuing to effect global businesses, just under half (45%) said disrupted supply chains could still have an impact on profitability.
In a bid to mitigate these challenges, nearly three quarters of respondents (67%) will be using pricing promotions over the next few months, and more than half (54%) say those promotions will be greater than in previous years.
However, the picture is mixed in terms of what respondents expect these promotions to deliver. A third (30%) are expecting a lower volume of sales, and a similar number (39%) anticipated a higher volume of sales. Likewise, a third (32%) are expecting lower margins, and slightly more (40%) predict higher margins.
This uncertainty is leading to careful reflection over internal processes for determining pricing. Three-quarters of respondents (73%) said sales pricing was more complex this year, yet a third are still using manual processes to manage pricing.
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Moss concluded, “Pricing promotions during peak can be a huge draw for customers, but to really make the most of them, businesses will need to be sure that they have the ability to execute their pricing strategy, and quickly pivot to respond to consumer demand, all the while protecting margin and profits at such a crucial time of year.”
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