Despite a 0.3% lift last month, retail sales fell by 1.2% in the three months leading up to July. With consumer confidence at a record low, retailers are in between a rock and a hard place right now. As inflation continues to spiral and the cost-of-living crisis persists, consumers are continuing to cut back on spending and prioritise essentials, especially over clothing and household goods. Retailers too are being affected by product price increases and rising energy costs, but they risk alienating consumers altogether if they hike prices up too much.
There are ways retailers can get creative in order to help shoppers through these tough times, but those efforts are challenging to balance with profitability and economic aid.
The most important effort in stopping inflation is getting supply and demand to match as closely as possible. Currently, many retailers are facing one of two scenarios – stock outs due to supply chain issues, or excess unwanted inventory after overbuying because of anticipated supply chain issues. Heavy discounting isn’t sustainable, especially in the long-term. Instead, retailers must look to improve demand forecasting – ending “just in case” approaches to ordering and getting creative with outdated excess supply would all help diminish excessive unwanted inventory. This would help keep costs down for consumers.