Half of Retailers Fear They Will Be Forced to Slash Prices before the Holidays

Almost half of US retailers fear they will be forced to slash prices before the holidays because of the downturn in consumer spending. A poll of 500 retailers found 43 per cent have surplus goods they’re desperate to offload – with fashion, homeware, baby and toddler the sectors struggling the most.

47% of merchants surveyed said the problem of excess stock is a major concern for their business. 53 per cent of those in this situation admit there will be ‘dangerous’ ramifications for their business if they fail to sell off their excess stock.

More than a quarter (27 per cent) have already started to suffer – having been forced to write off excess stock as a loss this year. 42% of merchants polled admitted to being concerned about their company’s ability to shift excess stock.

In addition to slashing the prices of products, retailers are likely to resort to offering freebies with other purchases, bundling products together, and even giving away unwanted items. But while this is a major concern for many businesses in the retail industry, major price cuts will likely be music to the ears of consumers in the wake of the ongoing cost-of-living crisis.

Further research of 2,000 adults who celebrate the holidays  – also commissioned by Inventory Planner – found 64 per cent are ‘depending’ on businesses to discount goods ahead of the festive period. Nick Shaw, a spokesperson for the inventory forecasting and planning software for businesses said,”Having 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. In addition, Shaw remarked, “Excess stock also means businesses have less room to fill their warehouses with new stock – goods which might be in demand – as well as less cash to buy new goods.”

The study also found retailers with excess stock estimate their surplus to make up 22 per cent of their overall stock holdings – with the value of this at almost $49,000 on average. Understandably, 53 per cent are concerned about the ramifications of this on their firm’s cash flow. As such, 58 per cent fear they’ll be left with no choice but to liquidate much of their superfluous goods.

In fact, more than half of retailers expect to liquidate much of their excess stock ahead of the holidays. And this is not a decision they’ll be taking lightly – 44 per cent admitted it will be ‘difficult’ for them to absorb the loss of liquidation – or for them to write off excess stock or mark down prices. Part of the reason for this worryingly common plight for retailers is how difficult it is for owners to predict customer demand and sales in what’s described as a fluctuating market.

Of those with excess stock, almost half (48%) admitted it’s practically impossible for them to know how much stock they’ll need in the coming months. This uncertainty is likely to have been caused in part by unsuccessfully attempting to forecast demand during the pandemic. With 59 per cent admitting pandemic-inflated online demand was a major factor behind purchasing excess stock in the first place. However, 58 per cent of all retailers polled intend to take steps to fix inventory planning issues ahead of the holiday season. Such measures include trying new product lines, improving internal processes such as spreadsheets, and ordering less stock.

Inventory Planner’s Nick Shaw added: “Keeping track of stock – knowing when to replenish goods and when not to, can prove to be very complex, especially when trying to do that manually during peak periods.

“And this process is only made harder by what’s been happening in recent years – whether that’s the pandemic or the cost-of-living crisis. Retailers should consider investment in technology tools to help optimise stock replenishment and planning; it is the best way to avoid being caught with surplus goods after the holidays that can play havoc on a firm’s cash flow.”