The decision made about stock levels can make or break a retailer’s Christmas, and managers at some UK companies will be holding their breath in the week ahead, hoping they have made the correct choices.
Graham Parker, Divisional Director at OCS Retail Support, told Retail Gazette that the increase in demand at this time of year has a huge impact on costs and resourcing, and the stock level debate is not just a simple matter of ensuring there are enough products on the shelves.
“Storage space, extra staff to manage, transportation loads, delivery availability, extra point of sale compliance and on-shelf availability will all bring an extra cost, reducing margins and making management increasing stressful,” he explained.
In an increasingly competitive industry, UK retailers face the catch 22 situation that stocking up for Christmas will keep customers happy but could cause oversupply problems in the new year.
“If stock is not in place customers will simple not wait and will go to the nearest place that does provide the product – not only are you losing potential sales but assisting your competitors,” Parker explained.
“Likewise overstocking can be a huge burden on resources that may be better allocated elsewhere and could attract opportunist thieves.”
His comments come in the week Opinion Research Business published a report in conjunction with software firm NetSuite, dubbed the UK High Street: Squeezing the Supply Chain.
The study indicates that almost one in three retailers would rather risk running out of stock this Christmas than having too much supply left over after the party season has fizzled out.
Figures from the study show that 40 per cent of retailers are applying additional pressure to wholesale and distribution partners by pushing for tighter margins, while 30 per cent are aiming for more rapid fulfilment.
Some 34 per cent of respondents revealed they had deliberately kept stock levels low throughout the course of 2010 in response to the economic climate, with 44 per cent saying they have kept stock levels very tight in the run-up to Christmas.
Parker said: “Careful consideration of getting your stock levels just right is paramount - enough to make sure you don’t lose out on potential sales but not too much that you struggle to change the range for January sales.
“The key to a successful festive period is having the correct stock available at the correct time and to do that you need advanced, reliable and accurate stock reports to make an informed decision.
“Make sure you are fully prepared and plan early and ahead of schedule to allow for any unforeseen circumstances.”