Press Coverage

Retailers gamble with stock this Christmas

Ed Owen 15 Dec 2010

Retailers have chosen to gamble on having too little, rather than too much stock this Christmas, and websites are failing to drive sales, new research suggests.

NetSuite interviewed 253 store managers in October. 34% said they had deliberately kept stock levels low throughout 2010 in response to the economic climate while 44% said they would be keeping stock levels very tight even in the run-up to Christmas.

Nearly a third (29%) went further, opting to have too little rather than too much stock on their hands. The strategy risks consumer disappointment on the high street.

John Lewis, Tesco, Sainsbury’s and Dixons all expect strong trading this Christmas.

Roman Bukary, head of industries marketing, NetSuite, said: “It’s hugely encouraging to see UK retailers take an optimistic view of trading conditions as we move towards 2011.

“However, keeping stock low and relying on suppliers to bridge any gaps in supply will stress retailer-distributor collaboration, require seamless communication and in case of any breakdown in the trading network, might leave shoppers disappointed.

“The wholesale/distribution sector is used to pressure from their retail partners, but need to gear up for today’s unpredictable trading conditions.

“Pressure to cut costs, accelerate fulfilment and increased competition within the industry means that wholesale/ distributors need to ensure they have every tool at their disposal to streamline their operations and change the way they work to cope with what’s likely to be a stressful and competitive Christmas crush – even before the snow factors in.”

Worryingly, more than half the retailers were failing to capitalise on the internet, despite shoppers flocking to online stores in the recent poor weather. While 80% of retailers had online stores, only 53% saw any additional profit from their online operation.

Just 22% of retailers use social media to tell people about their business, while just 28% monitor what customers are saying about them on social media sites.

Bukary said: “Over the past 10 years, ecommerce has changed the face of retail and gets more and more popular every year.

“The fact that so few high street retailers are truly taking advantage of the Internet to engage with consumers in a dialogue, gauge feedback, enhance sales and increase geographical reach could be a worry. As people’s shopping habits continue to migrate to the web, the risk is that high street retailers could be left behind.”

Despite this, 55% are optimistic while just 13% are pessimistic about the current trading conditions, with 40% expecting to outperform 2009 this Christmas.

In addition, 40% are putting pressure on wholesalers or distributors to push their margins down, while 30% want quicker fulfilment of orders.


Busy high street

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