Pure Beauty

Retailers fear three-year spending freeze as consumers cut cost of Christmas

Published: 8-Nov-2022

40% of retailers think the cost-of-living crisis will negatively impact sales for up to three years


Two thirds of consumers are expecting to spend more money on energy bills than celebrating Christmas this winter while retailers are reviewing their strategy as a result with two-fifths making supply chain efficiencies a priority over the next year.

Four in ten retail leaders predict the crisis caused by the current rate of inflation will have a long-lasting impact on sales over the next two to three years, according to new research from Advanced Supply Chain Group (ASCG).

The research surveyed 100 retailers in the UK in organisations with more than 250 employees and 1,000 UK consumers.

A fifth of retailers are reducing prices in response to the current crisis and 40% will focus on finding supply chain efficiencies over the next 12 months to mitigate cost pressures across their organisations. Almost half of retailers will challenge their supply chain partners to find ways of getting goods to the UK cheaper, more than a third (35%) of retailers will offer consumers fewer delivery options with another one in three reducing the length of the supply chain to lower costs.

Ben Balfour COO of ASCG said: “Consumers have shared they expect to spend more on energy bills than Christmas this year as we head into a tough winter and an anticipated recession. Retailers have reacted by adding lower priced products to their ranges, investing in more targeted promotions, adding payment options and investing in more promotional discounts and offers, but these are short-term sales drivers.”

Nearly half of the consumers surveyed (47%) think they need to free-up between £51 – £150 per month to cover rising energy bills. ASCG research shows retailers predict sales of jewellery, fashion clothing and accessories, and furniture to be hit hardest by the impact of the cost of living crisis. Three quarters of consumers agreed they expect to spend less on home furnishings and 69% will buy fewer cosmetics.

Ben Balfour added “Retailers face a tough trading period and need to take action in response to spiralling costs. Reviewing supply chains ranks as the number one starting point for retailers as they aim to reduce operating costs and enhance efficiencies. With consumer confidence so low and discretionary spending seriously under threat, only retailers with highly effective, agile and intelligent supply chains will thrive, or even survive, in the current backdrop. Now is the time for retailers to interrogate every part of a supply chain strategy to position themselves for long-term success.”

By Ben Balfour - Chief Operating Officer

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