Supply chain issues could be costing the UK economy over £5.6 billion


There will be fewer deals this holiday season, due to lingering supply chain disruptions, which will continue impacting retailers through 2022 according to research from Coupa Software, the Business Spend Management (BSM) solutions provider.

A survey of more than 600 supply chain leaders at retailers in the US, UK, France, and Germany conducted in October by Sapio Research on behalf of Coupa found some revealing findings about supply chain disruptions. 

Retailers anticipate revenue losses between 5-20% from the past 18 months due to supply chain issues, translating into billions lost for some of the world’s biggest economies.  

  • More than half (58%) estimate losses over 5%, while a quarter (26%) expect losses greater than 10%, and 5% said they will be greater than 20% 
  • The US is most affected with retailers reporting average losses of 5.7% - equating to $68bn from its GDP, followed by the UK with 5.3% - equating to £5.6bn from its GDP 
  • Germany and France reported lower average losses of 5.3% and 4.8% respectively  

Holiday Revenues Will Be Hit Leaving Consumers to Shop Early & Pay Full Prices

  • 3 in 4 (76%) UK retailers who usually offer Black Friday deals will not offer as many this year
  • Just under a third (29%) say they will offer between 25% - 50% fewer deals
  • 12% say they will offer between 50% - 75% fewer deals
  • Nearly 3 in 4 UK retailers (72%) are concerned that supply chain disruptions will affect their Christmas revenue
  • 68% are encouraging people to shop early
  • 51% are offering promotions earlier and 46% are displaying products even earlier 

Revenue Disruptions Go Beyond Holiday Season

There is broad agreement that supply chain issues will continue to be a long-term challenge with 9 of 10 UK retailers (90%) anticipating revenue will continue to be impacted by supply chain issues for at least the next six months.  

“Retailers are striving to meet demand, maximize revenue potential, and find efficiencies as they continue to face unprecedented supply chain disruptions. They are also encouraged to support key suppliers upon which they depend,” said Matthew Woodcock Regional VP, Supply Chain at Coupa. “To help overcome these omnipresent challenges, retailers are finding value in supply chain design and planning technology. They can stress test supply chains in real time, tear down silos, and eliminate blind spots across their businesses to outsmart disruptions.”

Retailers Suffer a Perfect Storm of Disruption

Additional findings from the survey include: 

  • The top issues in the UK in addition to Brexit have been HGV driver shortages, cited by 49% of all retailers, shortages and delays relating with shipping containers (43%), issues caused by ‘long’ supply chains (42%) and staffing shortages (24%).
  • In Europe, the impact of Brexit was also a significant factor - it was the top issue in the UK with nearly half (46%) of all retailers saying it has negatively impacted their business. Brexit also had a bigger impact in Germany than in France, with 14% and 9% of retailers being negatively affected, respectively.
  • Concern for partners and wider networks is felt more keenly in the UK (59%) than in the US (56%), France (56%) and Germany (46%). This suggests that supporting partners and wider networks will become a top priority for UK retailers as they seek to recover and build more resilient supply chains. 

About the research 

This research was conducted among 618 managers and above, responsible for the supply chain, at retailers in the US, UK, France, and Germany. The interviews were conducted online by Sapio Research on behalf of Coupa in October 2021 using an email invitation and an online survey.  

  • The total cost of supply chain issues to the UK economy is based on data from the Office of National Statistics for the UK’s GDP and the contribution of retail to UK GDP, combined with Coupa’s research among senior retail supply chain managers who estimated percentage losses to their businesses as a result of supply chain issues in the UK.
  • The total cost of supply chain issues to the US economy is based on GDP data from the World Bank combined with Statista data on the contribution of retail to US GDP, and Coupa’s research among senior retail supply chain managers who estimated percentage losses to their businesses as a result of supply chain issues in the US. 

Richard Osborne, founder and CEO, UK Business Forums said: "As these figures show, challenges within supply chains have significantly added to their existing burdens. At a time when there should be an optimistic uplift in sales as we head towards and through Christmas trading, business owners face yet more uncertainty. Inevitably this will have a knock-on impact on consumers with fewer deals, hiked prices and shorter supplies all weighing heavily on our Christmas spirits".

Chris Anderson, head of business development at Solent Gateway, the UK’s fastest growing port said: “The critical shortage of HGV drivers is a key bottleneck which is adding further strain to an already stretched supply chain. Retailers who want to guarantee Christmas deliveries will be competing not only for HGV drivers but also warehousing space, staff and possibly a reduced supply of available goods. Reliance on a ‘just in time’ delivery model is riskier than ever. Retailers can try to secure contracts with haulage companies to minimum guaranteed access to HGVs, but the haulage companies will be able to charge increasing prices as retailers get more concerned towards Christmas. Alternatively, they could build up stock, but this drives storage costs, if you can get the storage of course, and products may also have a shelf life to consider. Retailers can also own their own fleet of vehicles, something many had moved away from as contracted services were cheaper. Driver retention and the availability of vehicles in the short term are real challenges to be overcome for this option to be viable, something which is unlikely to be resolved before Christmas. We’ve invested heavily in creating additional capacity for container storage to help alleviate the pressure facing the container ports and shipping lines but it’s only one step in a stressed supply chain.”

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