Two-thirds of retailers in the South West say the ‘double whammy’ of spiralling interest rates and inflation will hit peak trading in the run-up to Christmas - survey

Two-thirds of retailers in the South West say the ‘double whammy’ of spiralling interest rates and inflation will hit peak trading in the run-up to Christmas, according to a new survey.

More than four out of ten sellers (41 per cent) are planning to buy less stock for festive shoppers because of the impact of 14 consecutive rate rises over the past two years, taking the base rate to 5.25 per cent.

Inflation is also a big issue with 59 per cent of merchants saying they are lowering margins rather than passing on the full cost of rising prices to customers.

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Six out of ten retailers (60 per cent) are sensitive to accusations of ‘greedflation’ - passing on above inflation prices rises to boost margins.

The results are from a new survey of 500 retailers by Inventory Planner, which supplies forecasting and planning software for businesses.

It found that 70 per cent of retailers had reported that inflation had had a major impact on inventory over the past 12 months.

More than six out of ten shops (61 per cent) said they were concerned about losing market share if they passed on the full cost of rising prices.

Economic turmoil over the past year caused by rising interest rates and inflation has left many retailers facing a bleak outlook in 2024.

Just less than half of those surveyed (49 per cent) said their cash flow position was ‘precarious’ and 42% said they had had frequent cash flow issues this year.

A third of those surveyed said they struggled to effectively manage cash flow.

Almost half of retailers (45 per cent) have written off stock in the last year - with 29 per cent forced to dump up to 10 per cent.

Black Friday - scheduled for November 24 - will be even more important this year, with 67 per cent of retailers planning to discount products.

The consumer downturn over the last six months has left 65 per cent of retailers with excess stock and this is a ‘major concern’ to 48 per cent of sellers.

Almost four out of ten retailers (37 per cent) say they have too much cash tied up in inventory and 45 per cent said they were struggling to forecast demand using manual spreadsheets.

Some 41 per cent of retailers said they struggled to buy the right amount of stock and 45 per cent said they needed to reduce their inventory carrying costs.

Just over four out of ten retailers (41 per cent) had run out of stock in some lines over the last six months, with three–quarters of those affected saying this had resulted in a loss of revenue.

Almost a fifth of those surveyed (19 per cent) recommended Inventory Planner software to better manage stock forecasting.

An Inventory Planner spokesperson said: “Retailers in the South West are being hit by the double whammy of spiralling interest rates and inflation in peak trading as we head towards Christmas.

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“Many are reluctant to pass on the full impact of rising prices - sensitive to accusations of greedflation - which means that margins are being lowered.

“The economic turmoil has made stock forecasting even more hazardous in 2023 and too many retailers are still relying on time-consuming manual spreadsheets to predict demand when automation can provide speedier and more accurate outcomes.”

Inventory Planner is used by more than 2,600 merchants worldwide to automate stock purchasing and better manage customer demand.