Retailers Are Gambling With Stock Shortages During Holiday Buying Season

Nearly one-third of retailers in the UK would rather risk running out of supplies this December than have excess stock on their hands, according to new research from NetSuite Inc.

The study, carried out among over 250 UK retailers by ORB (Opinion Research Business), found that the potential stock shortages during retailers' traditionally busiest time of the year continue a trend for retailers to hold less inventory during the downturn. A third of survey respondents (34 percent) said that they had deliberately kept stock levels low throughout 2010 in response to the economic climate, and almost half (44 percent) reported they will be keeping stock levels very tight even in the run up to Christmas.

As you might expect, retailers are passing the pressure onto their wholesale / distribution partners, with two in five retailers (40 percent) asking suppliers to maintain discounts or cut prices, even if they have been ordering lower volumes, and half of retailers (47 percent) are using more suppliers to enable price comparisons and help drive down costs. 30 percent of respondents are asking their suppliers for shorter order fulfillment times.

"The wholesale / distribution sector is used to pressure from their retail partners, but need to gear up for today's unpredictable trading conditions," Roman Bukary, Head of Industries Marketing, NetSuite, said. "Pressure to cut costs, accelerate fulfillment and increased competition within the industry means that wholesale / distributors need to ensure they have every tool at their disposal to streamline their operations and change the way they work to cope with what's likely to be a stressful and competitive Christmas crush even before the snow factors in."

Despite the priority put on tight stock levels, most retailers in the survey remain reported that they are looking forward to better sales performance than in 2009. More than half (55 percent) of those polled are positive about current trading conditions. Looking specifically at Christmas, 40 percent said they expect festive trading in 2010 to outperform that of 2009.

The full report, "The UK High Street: Squeezing the Supply Chain" is available for download here:

TAGS: Finance
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