As the cost of living continues to bite, the UK housing market may begin to slow, potentially dampening the consumer appetite for spending on interiors – according to Advanced Supply Chain Group (ASCG), which surveyed over 1000 UK consumers in September 2022 and found that 75% of UK shoppers are planning to spend less than usual on home furnishings in 2023.
Retailers are also concerned about the outlook for the sector, with furniture identified as one of the top three areas where sales are likely to fall, behind jewellery and fashion accessories. ASCG also surveyed 100 UK retailers in September and the research shows that brands are not planning to wait passively for the downturn to pass.
Instead, retailers are aiming to reduce operating costs and improve cash flow by making improvements in the supply chain. This is particularly important in the furniture and interiors sector, which has been dealing with almost three years of disruption, with a surge in sales during lockdown, followed by the jump in shipping costs when economies reopened and a shortage of finished goods and raw materials worldwide.
Among retailers in ASCG’s survey group, 40% plan to review their supply chain to find efficiencies, 37% will renegotiate terms with suppliers, and 29% expect to replace suppliers entirely and find new ones. These actions were identified ahead of reducing sales and marketing budgets (24%) and cutting staff (20%) as ways to reduce operating costs and improve their cash position.
Caroline Ellis, commercial director at ASCG, comments: “As the peak festive trading season starts, and deadlines loom for delivery before Christmas, many interior retailers will be looking at discounts and promotions to drive sales. This is in line with the broader retail sector, with 46% of our survey respondents planning to add new, lower-priced products, and 31% to invest more in promotions and discounts.
“However, doing so makes demand even more volatile and challenging to manage, and retailers will need accurate, accessible supply chain data in order to respond to changes and protect their margins.
“We work with retailers to enhance their supply chain agility using our bespoke software solution, Vector. It draws together data from all the key points in a retailer’s supply chain, including sales channels, warehouses and order fulfilment sites, as well as tracking freight status. The integrated overview the software creates lets companies see where bottlenecks are occurring and where costs are mounting up. This means improvements are targeted where they are most needed.
“Using Vector lets our customers make quick, profitable decisions, such as moving stock out of an online warehouse and into a high street store, to match where demand is coming from.”
ASCG’s research highlights how habits have changed already, even before winter energy bills arrive or higher interest rates push up monthly mortgage payments. Some 32% of people surveyed said they are already spending less on non-food shopping due to the cost of living crisis, and 29% have traded down to cheaper versions of the items they normally buy.
Caroline concludes: “With such a high degree of uncertainty facing both interior retailers and their customers, brands need to be armed with the most accurate, up-to-date information, and the ability to draw meaningful insights from their data, in order to respond to changes and make the right decisions quickly.”
To find out more about ASCG’s intelligent supply chain solutions, email email@example.com.