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Report suggests that a quarter of UK retailers could go bust in four weeks

Written by Robert Moore Marketing Manager 28 June 2022

Report suggests that a quarter of UK retailers could go bust in four weeks

According to a recent report from Brightpearl, a major software supplier to retailers,  more than a quarter of retailers in the UK are just four weeks away from going bust, with supply chain issues to blame.

It was found that last year, 85% of retailers had experienced, and been hit from supply chain losses and 46% of shops and ecommerce brands had experienced stockouts, resulting in a loss of sales.

If things do not improve, Brightpearl suggested that 26% of sellers will run out of cash in four weeks.

Near to three in ten firms said the biggest threat to survival was supply issues or distribution failure – more of an issue that poor cash flow and customer retention!

In terms of sector, luxury goods were hit hardest with 92% of firms experiencing troubles to get stock. DIY & Gardening (73%), Sports & Leisure (60%), Electronics (53%) and Fashion and Footwear (50%) were also impacted quite significantly.

In terms of the biggest problem of suppliers:

  • Shortage of goods – 68%
  • Increased shipping cost – 64%
  • Lengthier time for products – 54%
  • Suppliers selling out of stock – 46%
  • Increased raw material price – 40%

To respond to the difficult times, more than 50% of sellers have had to increase prices, with 29% taking a hit to keep prices stable and 28% seeking products that are domestic to try and reduce the impact.

This supply chain crisis is not just impacting sellers, but also buyers. 37% of buyers have had to buy from a new brand due to items being out of stock where they would regularly go to.

This research is interesting as it does show that retailers are having problems with stock supply and distribution as a result of bottlenecks in the system.  In addition there are obvious geo political events that have increased input prices.

We think it is unlikely that 25% of retailers will go bust, even if the situation does not improve, as the rules of economics will mean that prices will rise significantly as supply is restricted further.  The long term effects of rapid price rises will not be good for the economy as a whole and some businesses will not survive but we will will revisit this research in a month and see what has happened. 

Having excellent systems in place to manage change is essential for survival in any business and Brightpearl do have an interest in making sure that retailers buy their products as opposed to their competitors.   However suggesting that 25% of retailers will go bust in a month is perhaps a tad sensationalist.  But watch this space!

How will retailers cope? Will they? Or will we see a number of insolvencies following?

Category: Retail

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