# 17032993 © Sandra Cunningham | Dreamstime
Retailers Fear Major Revenue Hit Due to Supply Chain Challenges

Retailers Fear Major Revenue Hit Due to Supply Chain Challenges

Oct. 23, 2023
Half of businesses are experiencing excess inventory and 54% are concerned about one or more of their company's suppliers shutting down.

Eighty-three percent of supply chain professionals at retailers in the U.S. and U.K. anticipate supply chain disruptions will negatively impact revenue this holiday season – up from 70% in 2022, according to a survey from Coupa Software. The survey included 300 retail supply chain leaders and more than 2,000 consumers in the U.S. and the U.K.

Retailers anticipate an average revenue loss of about 10%, which during this lucrative selling period could result in billions of dollars lost. 

Key Takeaways

  • 91% fear they'll miss hitting holiday sales forecasts
  • 81% worry that pressure on family budgets will significantly reduce consumer spending
  • 77% anticipate product shortages

"While I've been seeing Christmas decorations cropping up in stores for the last few months, we aren't even close to the height of the holiday shopping season. Yet our research shows over half of retailers (53%) are already experiencing out-of-stocks on key holiday items," said Nari Viswanathan, senior director, supply chain strategy at Coupa, in a statement. "If retailers want to avoid empty stockings this year, they must act quickly to capitalize on recent supply chain learnings, what-if scenarios, and rapid response processes to minimize potential disruptions during these critical last months of the year."

Supply Chain Woes Won't Bring Joy to the World

Retailers predict when it comes to product shortages the most impacted goods will be household goods and decor (45%), apparel (41%), and electronics (41%).

Half of businesses are experiencing excess inventory and 54% are concerned about one or more of their company's suppliers shutting down.

With labor shortages looming this holiday season, 61% of retailers expect to experience increased wait times and 54% expect increased shipping times due to staffing shortages.

"The last few years have been without question hard for supply chain professionals, and we get it, but our data shows a majority of retailers are still challenged by supply chain disruptions, product shortages, and excess inventory. Meaning they aren't applying the right fixes to their design and planning," said Viswanathan. "If businesses want to protect their bottom line they must move from one-off episodic designs of their supply chain networks to a state of continuous design. When supply chains are designed to adapt and evolve, organizations can make tradeoffs, optimize policies, simulate situations, and accelerate the time between making and executing decisions. This builds resilience and enables businesses to close their books at the end of the year with confidence."

Money on the Mind 

For both businesses and consumers, higher costs are top of mind this holiday season. Almost three-quarters of consumers are concerned that the cost of living will negatively impact their ability to spend. This is particularly stark among Gen Z and Millennials, with 80% being concerned.

Almost a third of consumers plan to spend less on holiday groceries, travel, and gifts compared to last year. On average, consumers are reducing their spending by 24%.

Don't Be Slow When Prices Are Low

When it comes to holiday purchases, consumers are being heavily influenced by the cost of living (67%) and rising inflation (51%), with 66% of consumers concerned about higher prices in stores.

Tighter budgets have consumers on the lookout for savings. Half of consumers are waiting for discounts and sales to shop, in an effort to mitigate inflation and price increases, while a majority (51%) note that discounts and deals are the top motivating factor for purchasing from a specific retailer.

Brands are offering deals and sales earlier (65%) and more of them than last year (58%). But almost half (46%) of consumers are planning to wait until the end of the year–November and December–to do their shopping which might leave shoppers wondering where the holiday spirit has gone.

Latest from Global Supply Chain

25560070 © Yuliia Brykova | Dreamstime.com
Supply Chain Stability Improving
#64128824@Igor Groshev|Dreamstime
Preparing for Longer Conflict in the Red Sea: