The holiday shopping season is one of the most anticipated and important sales periods of the year. Consumers count on price markdowns, special deals and promotional offers. Meanwhile, brands and retailers have high hopes for the 2023 holiday season contributing significantly to their annual sales targets. But a new Creditsafe study reveals that these hopes could be dashed, as many brands and retailers have been grappling with mounting debt, excess inventory and cash flow problems this year.
The ‘Economics of Holiday Sales’ study reveals that 88% of brands and retailers are counting on holiday sales driving up to 40% of their annual sales. But it costs money to make money. And as our study reveals, nearly half (46%) either don’t have enough cash in their accounts to finance their holiday orders or are unsure if they do.
Matthew Debbage, CEO of the Americas and Asia for Creditsafe, said: “It’s a positive sign that brands are setting ambitious goals for the holiday season. But achieving these goals doesn’t just depend on offering steep discounts and selling higher volumes. Other factors will play a major role, especially since it’s been a rough few years with a pandemic, recession, rising inflation, rising interest rates and decline in consumer spending. That’s why financial planning, data analysis, cash flow forecasting, inventory planning and supplier due diligence are all so critical. Without this type of planning, brands and retailers will be at a higher risk of increased operating costs and debt, while excess inventory will eat into their profits, cash flow will suffer and annual revenue targets will be missed.
But it’s not just about making sure brands and retailers have enough cash and have analyzed sales volumes, inventory orders and operating expenses from the last holiday season. It’s also about keeping a watchful eye on how your suppliers manage their finances. Their financial mismanagement and cash flow issues can lead to factory shutdowns,…
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