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UK retailers could lose 30% of revenue as holiday supply chain issues bite again

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Supply chain disruptions and the rising cost-of-living are expected to have an impact this holiday season, according to new research from Coupa Software.

The survey, conducted among 300 supply chain leaders at retailers in the US and UK and over 2,000+ consumers, found that UK retailers expect up to 30% of revenue losses this holiday season as they prepare for another wave of supply chain disruptions and reduced consumer spending.

In its survey, nine out of ten UK retailers (86%) were concerned about hitting holiday sales forecasts this year, with 75% expecting to lose between 5 and 30% of their revenue, translating into billions lost for UK businesses and the economy.

The research also found that 82% of retailers anticipate another wave of supply chain disruptions this holiday season, with 78% expecting to experience product shortages. Food (51%), household goods (38%), apparel (32%) and toys (31%) topped the list of categories where the UK is set to have its most serious supply issues.

Cost of living puts the screws on consumer spending
As UK economic turbulence continues, cost-of-living is a top concern for both consumers and retailers. The report said that eight in ten (82%) retailers fear it will have a negative impact on the consumer’s ability to spend this holiday season. Decreased consumer spending (61%) was the top concern for businesses, followed by meeting delivery deadlines (52%) and lack of sufficient labour (46%) as they approach this critical period.

Cost-of living will dictate purchasing decisions for 76% of consumers, the study found. Nearly half (40%) of UK shoppers expect to spend less money on holiday groceries, travel and gifts compared to last year. Two thirds (65%) plan on reducing their budget between 10 and 50%, with some (13%) saying their holiday budget won’t exceed £80.

With expectations for continued cost-of-living challenges, consumers are having to rethink their holiday spend and cutting down on non-essential item purchases. Toys aren’t expected to fly off shelves this year – as only 25% of consumers surveyed indicated that toys were a priority for their holiday shopping in 2023. Instead, we can expect to see UK shoppers prioritise food (76%) and clothing (46%) this holiday season.

“As supply chain issues and cost of living put the squeeze on revenues this season, retailers will be in a race to maximise profit margin and meet demand, while still keeping prices down for consumers,” said Matthew Woodcock, RVP supply chain strategy at Coupa.

“With product shortages likely to impact consumer access to essential goods, now is the time for retailers to capitalise on recent supply chain learnings, what-if scenarios and rapid response processes they established over the past years, and act quickly to minimise potential disruptions during these critical last months of the year.”

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