A quarter of UK retailers are just four weeks away from going bust due to supply chain issues

Over a quarter of UK retailers are just four weeks from going bust due to supply chain issues, according to report by retail operations platform Brightpearl.

The research reveals that 85% of retailers have been hit by supply chain issues in the last year and 46% of shops and ecommerce brands have experienced stockouts, resulting in a loss of sales.

According to Brightpearl, the crisis is so severe that 26% of sellers are in danger of running out of cash within four weeks if things do not improve.

The report found that shortage of goods was the biggest supply problem, experienced by 68% of retailers.

Other issues included increased shipping costs (64%), lengthier delivery times for products (54%), suppliers selling out of stock (46%) and the increased prices of raw materials (40%).

The hardest hit sector was luxury goods, with 92% of firms experiencing difficulties getting stock. Other sectors strongly impacted included DIY & gardening (73%), sports and leisure (60%), electronics (53%) and fashion and footwear (50%).

Almost three in ten firms (28%) said supply issues or distribution failure was the biggest threat to their viability – by far the highest response, beating poor cash flow (18%) and customer retention (16%).

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As a result of the disruption, 58% of sellers have put up prices, 29% are taking a margin hit to keep prices stable and 28% are trying to source products domestically to limit the impact.

In addition, 16% of retailers are planning to invest in technology or new vendor partners to limit the damage caused by supply issues.

Shoppers’ brand loyalty is also being eroded by the crisis, with 37% saying they have bought from a new brand in the last year because an item was out-of-stock at their regular supplier.

“We are in the worst supply chain crisis that any of us can remember and there is no sign of the problems easing before the end of the year,” Brightpearl chief executive Derek O’Carroll said.

“UK firms are going to need to plan for months of further turmoil and issues over stock, which can result in unhappy customers and major cash flow issues. There’s no doubt, online firms’ inability to predict demand and manage stock is the number one risk to their long-term health.

“It doesn’t need to be that way though; the key message is get your demand planning right, and utilise tools and technologies that can help. It will underpin purchasing of goods, marketing and pricing strategies, staffing levels and ultimately support business growth.

“At the same, it’s important to be honest with customers who are well aware that we are in a global crisis and will be more tolerant of delays than they would be in less turbulent times.”

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