Small businesses could be forced to slash prices before Christmas

Cost of living crisis means consumers will be shopping on a budget

Rob Knight
Friday 21 October 2022 09:29 BST
How soon should you exchange holiday gifts in a relationship?
How soon should you exchange holiday gifts in a relationship? (Getty Images/iStockphoto)

Half of the UK’s small businesses (SMEs) fear they will be forced to slash prices before Christmas because of the downturn in consumer spending.

A poll of 250 SME owners found 45 per cent had surplus goods they were desperate to offload.

And 59 per cent in this situation admitted there would be “dangerous” ramifications for their business if they failed to sell off the excess stock.

In addition to slashing the prices of products, small retailers were likely to resort to offering free items with other purchases, bundling products together, and even giving away unwanted items.

But while this was a major concern for UK enterprises, large price cuts will likely to be music to the ears of consumers because of the ongoing cost-of-living crisis.

A separate survey of 2,000 adults who celebrate Christmas – also commissioned by Inventory Planner – found 41 per cent were “depending” on businesses to discount goods ahead of the festive period.

A spokesperson for the inventory forecasting and planning company 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.

“Excess stock also means businesses have less room to fill their warehouses with new stock – goods which might be in demand.”

The survey also found business owners with excess stock estimated their surplus to make up 19 per cent of their overall stock holdings – valued at nearly £66,000.

Nearly two-thirds, or 59 per cent, were concerned about the ramifications of this on their firm’s cash flow. As such, 45 per cent fear they would be left with no choice but to liquidate much of their superfluous goods.

Owners said it was difficult to predict customer demand and sales in what they described as a fluctuating market.

Of those with excess stock, 70 per cent admitted it was practically impossible for them to know how much stock they would 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 62 per cent admitting pandemic-inflated online demand was a major factor behind purchasing excess stock in the first place.

However, 41 per cent of all business owners polled intended to take steps to fix inventory planning issues before Christmas.

Such measures included trying new product lines, internal processes such as more stock checks, and ordering less stock.

The survey carried out through OnePoll found 17 per cent were looking to investment in technology systems to help optimise stock replenishment and planning.

A spokesperson for Inventory Planner added: “Keeping track of stock – knowing when to replenish goods and when not to, can prove to be very complex.

“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.”

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