A recent survey conducted by Inventory Planner, a leading provider of forecasting and planning software, has revealed that two-thirds of Scottish retailers anticipate a challenging holiday season due to the combined pressures of soaring interest rates and inflation. The study, based on responses from 500 retailers, paints a concerning picture of the retail landscape in the run-up to Christmas.
Key Findings:
- Impact of Rising Interest Rates:
- 41% of retailers plan to reduce stock purchases for festive shoppers due to the impact of 14 consecutive rate rises, bringing the base rate to 5.25%.
- 60% of retailers are wary of accusations of ‘greedflation,’ indicating their sensitivity to passing above-inflation price hikes to consumers.
- Inflation Woes:
- 59% of merchants are adjusting margins rather than passing on the full cost of rising prices to customers.
- 70% reported a significant impact of inflation on their inventory in the past 12 months.
- Financial Strain:
- 49% of retailers deem their cash flow position as ‘precarious,’ with 42% facing frequent cash flow challenges this year.
- 37% feel burdened by excess cash tied up in inventory.
- Stock Management Challenges:
- 45% struggle with forecasting demand using manual spreadsheets, leading to difficulties in managing inventory.
- 41% find it challenging to purchase the right amount of stock, and a similar percentage struggle with high inventory carrying costs.
- Black Friday Significance:
- 67% of retailers plan to offer discounts on Black Friday (November 24), indicating the event’s growing importance in their sales strategies.
The economic turbulence caused by rising interest rates and inflation has left retailers grappling with uncertainties. The reluctance to pass on full price increases to consumers, coupled with the challenges in managing stock effectively, underscores the need for innovative solutions.
Inventory Planner’s spokesperson commented on the situation, stating, “Retailers in Scotland are being hit by the double whammy of spiralling interest rates and inflation in peak trading as we head towards Christmas. Many are reluctant to pass on the full impact of rising prices – sensitive to accusations of greedflation – which means that margins are being lowered.”
The spokesperson emphasised the importance of adopting automation to enhance stock forecasting accuracy. Inventory Planner, used by over 2,600 merchants globally, offers retailers a streamlined approach to automate stock purchasing and manage customer demand more efficiently.
As Scottish retailers brace for the holiday season amid economic challenges, the adoption of advanced technology may prove instrumental in navigating the complexities of inventory management and ensuring a successful festive period.
