7 Shocking Stats About the Supply Chain Crisis Every Retailer Should Know

Since the time when Covid-19 emerged and turned the retail industry (and everything else) on its head, brands are still grappling with global supply chain issues. In fact, with the impact of subsequent world events factored in, the crisis is now arguably at its most challenging phase.

The latest research from our sister company Brightpearl has revealed for the first time the shocking extent of the supply chain crisis within the retail sector.

Top 7 inventory Shortage Statistics

Here are seven of the most jaw-dropping stats, along with insight on how our demand forecasting software is essential for helping merchants navigate the crisis.

1. 85% of brands are affected

Here at Inventory Planner, we knew the supply chain crisis was bad, but we didn’t know it was this bad… Brightpearl’s research revealed that in the UK, 85% of retailers have been impacted in the last 12 months (or are currently impacted) by supply chain issues. In the US, it’s 80% of all retailers – with significant variations for different sectors. For instance, 78% of merchants in the DIY and Gardening sector, and 67% in Baby and Toddler sector, are facing major issues right now.

Interestingly, the biggest issue for brands on both sides of the Atlantic is a shortage of goods, affecting 68% of merchants in the UK and 67% in the US. Longer lead times, stockouts, the rising price of raw materials and increased shipping costs are also pushing retail brands to their limits.

2. It’s the #1 threat to retail businesses

Supply chain struggles are the number one threat to British and American brands in 2022, with up to 32% of brands citing them as their biggest risk and up to 33% claiming them as their biggest challenge during peak periods.

In fact, the situation is so dire that one in four (26%) UK brands claim to be just four weeks away from supply chain issues causing ‘crisis point’ issues with cash flow, and a third (31%) of US brands report they are just eight weeks away from financial disaster.

3. HALF of brands have run out of stock

As all retailers know, successfully managing inventory is fundamental for success – and out-of-stock events are undeniably bad for business. They disrupt cash flow, disappoint consumers and hit profits.

Worryingly, the ongoing supply chain crisis has resulted in half (52% in the US and 46% in the UK) of retail brands experiencing stockouts that have resulted in a loss of sales.

Inevitably, there’s been a knock-on effect on consumers – in the last 12 months, a third (35%) of Americans have reported being annoyed to discover a product they wanted is sold out or unavailable when they came to order online.

4. Shipping costs have jumped by more than 20%

The combination of surging pandemic demand and supply chain problems has caused shipping costs to skyrocket across the globe. Average shipping prices have increased by 23% for US retailers in the last 12 months, and 21% for retailers in the UK.

Nobody has been able to escape the hike in costs, but bigger brands have been the worst affected according to Inventory Planner’s research. In the UK, large brands (£50-100m turnover) have suffered a staggering 55% jump in rates.

Worst of all, experts predict that costs will continue to rise through 2023, and brands admit they are bracing themselves for the situation to get even worse, with a further 25% supply chain costs increase expected on average.

5. Up to 6 in 10 retailers are increasing prices to cope

Desperate times call for desperate measures – and retailers are turning to desperate (and short-sighted) tactics as they attempt to ride out the supply chain storm.

Nearly six in 10 merchants (58% in the UK, 51% in the US) have made the difficult decision to put up their prices to mitigate the impact of the supply chain crisis. Brightpearl’s research has also shown us that up to 40% of retailers are extending delivery timescales to cope, one in three (29%) are taking a hit on profits to keep prices competitive and nearly 1 in 5 (17%) are reducing their marketing spend to slow down demand.

The concern here, of course, is that taking this kind of action runs the risk of punishing or even driving away customers, who may never return to your brand. Without enough inventory to meet demand at the right price, brands aren’t able to grow – and might be lucky just to survive.

6. A third of consumers have switched loyalty

Consumers can be a fickle bunch. One minute they’re filling up their virtual basket and singing your praises in your reviews, the next they’re ditching you for a cheaper, faster or more attractive competitor.

As a direct result of the supply chain crisis, the average American was let down four times during last peak season and 37% of British consumers chose to shop with a new brand over the last year, simply because they had an item in stock.

This is a major issue. We know it’s cheaper and easier to retain existing customers than it is to attract new ones – so brands can’t afford to lose customers over supply chain issues, or take a lackadaisical approach to finding ways to avoid them.

7. Up to 30% of brands are investing in tech as a solution

Technology has the power to help retailers successfully navigate the twists and turns of the supply chain crisis. Inventory Planner, in particular, is a key tech tool because it enables brands to accurately predict future demand for products.

By analyzing exactly how much stock is needed to meet future demand, taking into account delays and longer lead times as well as promotions and seasonal peaks, retailers can use our demand forecasting tool to keep supply steady and avoid issues like stockouts altogether.

While the research shows that only around half of brands (47% in the US, 41% in the UK) currently use demand forecasting software, it also reveals that 30% of retailers are actively investing in technology or new vendor partners in order to mitigate supply chain issues – which is encouraging.

What should retailers do now?

The stats above clearly highlight the widespread havoc caused by the ongoing supply chain crisis. It’s shocking to see the reality of such widespread impact and saddening to see the desperate (and short-sighted) measures many brands are taking – from hiking prices to taking a hit on profits.

Merchants may feel understandably overwhelmed by the scale of the crisis, but they don’t have to be. Inventory Planner offers brands clarity, confidence and certainty so they can survive – and even thrive – even amidst the chaos of current times. Retailers must take advantage of it.

Start your free 14-day trial of Inventory Planner now – no credit card required.