Coupa: Supply chain challenges to hit festive season

Coupa research suggests supply chain issues this holiday season could cause revenue losses for retailers in the UK and US

Supply chain leaders at retailers in both the US and UK are expecting up to 30% of revenue losses this holiday season as they prepare for another wave of supply chain disruptions and reduced consumer spending. 

The Coupa survey was conducted among 300 supply chain leaders at retailers in the US and UK, and over 2000 consumers.

Key impacts on holiday season for supply chain and procurement

Nine out of ten UK retailers (86%) are 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.  

Coupa’s survey shows that 82% of retailers anticipate another wave of supply chain disruptions this holiday season. As businesses prepare for the last leg of 2023, 78% expect to experience product shortages where food (51%), household goods and décor (38%), apparel (32%) and toys (31%) top the list of categories where the UK is set to have its most serious supply issues.

“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.”

Price caps on essential items will tackle only one side of the issue 

As conversations around putting a price cap on essential food items continue, 78% of consumers agree that introducing price limits might ease cost of living pressures. To reduce revenue risk and put a halt to soaring prices ahead of Christmas, nearly three quarters (72%) of UK retailers support the UK government’s plans and say they’ll likely voluntarily introduce price limits. Yet, half of them (50%) are worried that if price limits for essential items are introduced, they will need to absorb any price differences and offset the impact on their revenues elsewhere.  

With looming supply chain issues, price caps may put further pressure on suppliers and retailers, who will be pitted against one another to offer the lowest price. Nearly half (43%) of UK retailers shared that their company is already experiencing out-of-stocks on key holiday items this year and 54% are concerned about one or more of their company’s suppliers shutting down. 

"Introducing price caps on essential items might help to calm the storm on the surface, but that is a stop-gap solution to a much more complex problem,” Woodcock continued. “As the UK braces itself for continued economic disruption and post-Brexit challenges, ensuring smooth supply chain operations will be key to minimising these challenges in the long term. It is essential for retailers to find ways to streamline supply chain processes, tackle any risks ahead of time and ensure they can keep prices down without compromising on revenue.”

FInd out more about how supplier-buyer relations are now improving.

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