A quarter (26%) of UK retailers are four weeks away from going bust due to supply chain difficulties, according to a survey.
The survey, by retail tech firm Brightpearl, found supply shortage was the biggest danger faced by companies (68%), closely followed by increased shipping costs (64%).
Businesses were also hit by lengthier delivery times for products (54%), suppliers selling out of stock (46%) and the increased prices of raw materials (40%).
These disruptions have increased costs by 21%, the survey of 500 UK retailers found.
Consequently, almost six out of 10 sellers (58%) have put up prices and 29% are taking a margin hit to keep prices stable. A further 28% said they were trying to source products domestically to limit the impact of disruptions.
Derek O’Carroll, CEO of Brightpearl, said: “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.
“For retailers, the problems could be particularly severe as they prepare for autumn and peak trading in the months building up to Christmas.”
Luxury goods – including retailers who specialise in jewellery, watches and other high-end accessories – was the hardest hit sector, with 92% of firms experiencing difficulties getting stock.
Other sectors strongly impacted included DIY and gardening (73% experienced problems), sports and leisure (60%), electronics (53%) and fashion and footwear (50%).
Overall, 85% of retailers said they had been impacted by supply chain issues in the last year. Additionally, almost half of shops and e-commerce brands (46%) said they had experienced stockouts, resulting in a loss of sales.
O’Carroll continued: “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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