This year has been difficult in many ways for brands and retailers. A recession has been looming in the background; inflation has continued to rise; supply chain disruptions have thrown production off. It doesn’t help that consumer spending is expected to drop this holiday season due to high interest rates, student loan payments and debt limits being reached. Plus, the Fed’s interest rate increases have slowed the economy, meaning it’s likely that holiday sales could fall flat. In this report, we’ll look closer at how brands and retailers manage their holiday operations – the costs, logistics, inventory management, supplier management and promotions plans – to see how they’ll fare this holiday season.
Most brands are counting on holiday orders to hit annual sales targets, but lack cash to hit targets.
88% of brands and retailers expect holiday sales to drive up to 40% of their annual sales. But almost half (46%) either don’t have enough cash to finance their holiday orders or are unsure if they do.
The high cost of inventory glut: storage, markdowns, declining profits.
78% of the respondents have up to 50% leftover stock from the 2022 holiday season. Excess inventory has created multiple problems, including increased storage costs, markdowns and declining profits. For example, 23% of the respondents said excess inventory has led to increased maintenance and storage costs, while 22% said surplus stock has already reduced their profit margins.
Suppliers’ financial mismanagement threatens to derail holiday sales.
83% of brands and retailers have had to diversify their supply chains in the last 12 months because their suppliers had financial issues or went bankrupt. This could have to do with how brands are approaching supplier due diligence. As our study found, 56% of the respondents don’t run credit checks on their suppliers to make sure they have strong enough finances to complete holiday orders.
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