Scott Whiffin, executive director at supply chain and logistics consultancy, SCALA, commented:
“With retailers likely to face the challenges of weak consumer demand and additional costs at the start of the new year, many will be working hard to make the most of 2023’s final few weeks of trading.
“For manufacturers and retailers, a lot rides on this all-important golden quarter. And sadly, it’s been rocky to date, with retail sales slumping to the lowest level since the February 2021 lockdown in October, and November seeing disappointing levels of sales growth despite Black Friday sales.
“In light of this, some retailers may still have a backlog of stock to shift. Others – particularly those who trade directly with the consumer or via platforms such as Amazon and depend on this quarter – will have invested in stock which is currently sat in warehouses. This is particularly the case for companies with manufacturing operations based in the Far East which forecast months ahead of demand and may have been particularly optimistic to try and cash in on the traditional peak.
“With the Retail Think Tank predicting challenging times ahead, retailers may now be tempted to make quick and critical decisions regarding prices – think flash sales and dramatic cost dips to avoid getting stuck with excess stock. Agility across the supply chain will be key to flexing operations and navigating this uncertain terrain. Meanwhile, those working in warehouse fulfilment operations for such suppliers will experience a volatile few weeks in turn.
“Looking beyond the festive season, new year inventories will be interesting. What we’ve seen over the last year has been declining inventories and less demand for warehouse space, but excess stock and the anticipated weak demand may well impact this situation in the first quarter of 2024. Many third-party logistics providers (3PLs) operate on very thin margins and have already been hit by lower volume demand, high inflation, and high interest rates. A price war on warehouse space would only add to this headache going into the new year.”
