UK retailers urged to act as festive sales set for growth

Retailers in the UK have been urged to refine their strategies for the critical festive trading period, as forecasts indicate sales may exceed last year's performance. The call follows a year of subdued retail growth and ongoing challenges across global supply chains.

Sales outlook

Recent forecasts suggest the UK will outperform other major European markets in retail sales this festive season. Despite this positive outlook, the sector experienced minimal year-on-year growth of just 0.7% in total sales for 2024. The key October-to-December 'Golden Quarter' saw growth of only 0.4%, reflecting persistent headwinds facing the industry.

The festive season typically drives a significant proportion of annual retail revenues. For many UK retailers, it accounts for between 30% and 40% of annual sales, and for some brands this figure can approach half. This heightens the risks associated with any disruptions, from supply chain interruptions to delays in last-mile delivery.

Supply chain pressure

Retailers continue to navigate supply chain difficulties and a turbulent economic environment domestically. Preparing for the peak season is seen as critical for profitability, especially against a backdrop described as stagnant in overall sales performance.

Traditional physical retailers face rising inbound shipments and the constant need to keep shelves full. Online retailers experience acute pressure as well, with consumer expectations for same- or next-day delivery growing. Any delay increases the risk of lost sales due to out-of-stock products, making operational efficiency and contingency planning priorities.

Proactive planning

Industry specialists urge retailers to adopt proactive approaches to supply chain management, leveraging technology to monitor logistics in real time and to maintain flexible delivery and freight options. The move to combine traditional forecasting with scenario-based contingency planning is becoming an essential tactic.

"Traditionally, retail strategies focus on aligning orders with forecasted demand, but in recent years, things have been very different as planning ahead has been challenging. This year, with forecasts optimistically pointing to stronger growth during the Golden Quarter, the opportunity is certainly there for retailers to capture increased sales and market share, but only for those who plan proactively and remain agile," said Umar Butt, Vice President - Commercial - Europe & North America, Aramex.

The complexity of global supply chains has increased. Delays are now expected rather than unusual, with techniques such as pre-booking dual ocean carriers or adopting multimodal solutions - including sea and rail - being used to counter congestion at ports.

Butt highlighted shifting consumer habits, noting that some retailers are stretching promotional periods and maintaining inventory flow over a longer timeframe rather than concentrating activity around key dates. This requires ongoing adjustments to supply planning and inventory management.

Technology integration

Real-time tracking systems are now seen as fundamental. Such technology allows for shipment monitoring, early detection of potential delays, and the rapid activation of contingency plans to maintain high service levels.

"This is why integrating technology such as real-time tracking systems that allows teams to monitor shipments across every stage of the supply chain, flag potential delays, and activate contingency plans before disruptions impact customers, is worth its weight in gold. A simple solution given such technology has been around for some time now but given the landscape currently, they've become vital to keeping the flow of goods moving especially during times where demand is at its peak and delays are common - plus it ensures that retailers can maintain service levels and keep customers satisfied," said Butt.

Inventory strategies

Some retailers last year relied on reactive inventory management to cope with cost pressures and uncertainty, leading to either excess goods or key items being unavailable. This resulted in either higher storage costs or increased risk of markdowns on unsold items.

Butt said that leaving peak season planning to the last minute can result in missed opportunities and higher logistic costs, especially as freight capacity tightens towards October and the most desirable shipping slots are booked months in advance. "We're still seeing brands leaving their peak planning until the last minute, hoping capacity will be there or that demand will balance out. This of course comes at a risk as freight space tightens around October time, and the best slots disappear months earlier. Cargo space too will become very limited, and naturally in line with supply and demand will increase exponentially in terms of cost," said Butt.

He added, "That's of course not to say nothing can be done as there are there are practical steps retailers can take to mitigate this if they work closely with their logistics provider to see what can be done relative to their requirements. For instance, even at this stage, prioritising critical shipments through pre-booked express lanes or premium air-freight options can help secure space before final cut-offs. But needless to say, the window to do so is rapidly closing and retailers must act immediately to ensure products arrive on time."