Business Bayani PH

The holiday season, a pivotal period for businesses across the Philippines, is swiftly approaching. However, as the festive season beckons, a cloud of uncertainty hangs over the retail sector. 

Supply chain disruptions, mounting inventory issues, and ethical supply concerns are casting shadows on what should be a time of robust sales and soaring profits.

According to a recent survey titled “Economics of Holiday Sales,” conducted by Creditsafe and reported on the Chain Store Age website, these are the challenges that many retailers and brands are grappling with as they gear up for the crucial holiday sales season.

According to the survey, a staggering 88% of the 200 respondents pin their hopes on holiday sales accounting for up to 40% of their annual revenue. However, a concerning 46% of these businesses find themselves in a precarious position, either lacking sufficient funds in their coffers to finance their holiday orders or uncertain about their financial readiness.

A striking revelation from the study is that 78% of respondents still have 50% of their stock left over from the 2022 holiday season. This excess inventory not only poses logistical challenges but also leads to increased maintenance and storage costs for 23% of respondents. 

Additionally, 22% have witnessed a decline in profit margins due to the inability to offload surplus stock. The ominous specter of unsold inventory looms large as the 2023 holiday season approaches.

Matthew Debbage, who serves as the CEO of the Americas and Asia for Creditsafe, emphasizes the significance of tackling these obstacles. He highlights that while it’s encouraging brands are aiming high for the holiday season, success won’t hinge solely on offering big discounts and boosting sales volumes. 

Debbage points out that various other factors will exert a significant influence, particularly considering the challenging backdrop of recent years, marked by a pandemic, economic recession, surging inflation, rising interest rates, and a drop in consumer spending. 

In essence, he underscores the need for a multifaceted approach to navigate these complex market conditions successfully.

Further concerns arise as 24% of respondents express apprehension about witnessing lower order volumes and average order values during the 2023 holiday season. 

An additional 22% fret over the looming threat of inadequate stock supply from their suppliers to meet surging customer demand. 

Competitor undercutting, with superior pricing and deals, keeps another 22% awake at night, fearing they might lose out on potential sales.

Amid this web of challenges, the survey also shines a light on the financial and ethical concerns stemming from suppliers. An alarming 83% of respondents have had to diversify their supply chains over the past year due to supplier financial troubles or bankruptcy. 

Shockingly, despite this widespread issue, over half—56%—admit they do not conduct credit checks on their suppliers to ensure they possess the financial stability needed to fulfill holiday orders.

Additionally, ethical considerations come to the forefront. While 52% of respondents claim they would immediately terminate contracts and payments to suppliers involved in forced labor and child labor, an almost equal 53% confessed to not running compliance checks on suppliers to prevent such unethical practices.

As the holiday season approaches, the specter of supply chain disruptions and inventory woes looms large, causing ripples of concern throughout the Philippines’ retail landscape. 

In the face of these challenges, decision-makers, business owners, executives, and industry players must adopt a multifaceted approach to ensure their businesses thrive during this pivotal season.

For these professionals, the findings of the Creditsafe survey serve as a clarion call to reevaluate their financial readiness, strengthen supplier relationships, and bolster ethical practices within their supply chains. The success of the 2023 holiday season hinges on their ability to navigate these challenges, ensuring not only the survival but the prosperity of their businesses in these challenging times.

In conclusion, the global retail industry may be standing at a crossroads, grappling with unprecedented supply chain challenges and inventory concerns. This holiday season will undoubtedly test the mettle of decision-makers and business owners, who must rise to the occasion with astute financial management and ethical considerations to secure their position in this fiercely competitive market. 

As the calendar inches closer to the festive season, all eyes are on these industry leaders as they navigate a path to holiday success.◼