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
“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
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
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
“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.