Nearly half of small businesses in the UK have excess goods to the tune of £66,000 – and are faced with having to slash prices or even give away some of this surplus for free over the Christmas season.
A poll of 250 SME owners found that, of the 45% who are looking to offload surplus stock, they estimate this to make up a staggering 19% of the current stock holdings in their warehouse.
And three in five (59%) of those in this situation admit there will be “dangerous” ramifications for their business if they fail to sell off excess stock.
In addition to slashing the prices of products, small retailers are likely to resort to offering freebies with other purchases, bundling products together, and even giving away unwanted items.
But while this is a major concern for UK enterprises, major price cuts will likely to be music to the ears of consumers in the wake of the ongoing cost-of-living crisis.
Further research of 2,000 adults who celebrate Christmas – also commissioned by Inventory Planner – found 41% are “depending” on businesses to discount goods ahead of the festive period.
A spokesman for the inventory forecasting and planning software for businesses said: “Having excess stock is a problem, because products start to decrease in value after a while.
“Among other things, goods can start to deteriorate and perish, or go out of fashion, become redundant, and more.
“Excess stock also means businesses have less room to fill their warehouses with new stock – goods which might be in demand.”
Understandably, 59% of business owners with excess stock are concerned about the ramifications of this on their firm’s cash flow – with 45% fearing they’ll be left with no choice but to liquidate much of their superfluous goods.
Part of the reason for this worryingly common plight for small businesses is how difficult it is for owners to predict customer demand and sales, in what’s described as a fluctuating market.
Of those with excess stock, almost three-quarters (70%) admitted it’s practically impossible for them to know how much stock they’ll need in the coming months.
This uncertainty is likely to have been caused, in part, by unsuccessfully attempting to forecast demand during the pandemic.
And nearly two-thirds (62%) admitted that pandemic-inflated online demand was a major factor behind purchasing excess stock in the first place.
However, 41% of all business owners polled intend to take steps to fix inventory planning issues ahead of the holiday season.
Such measures include trying new product lines, internal processes such as more stock checks, and ordering less stock.
The study, carried out via OnePoll, also found 17% are looking to invest in technology systems to help optimise stock replenishment and planning.
The spokesman for Inventory Planner added: “Keeping track of stock, and knowing when to replenish goods and when not to, can prove to be very complex.
“And this process is only made harder by what’s been happening in recent years – whether that’s the pandemic, or the cost-of-living crisis.”
