UK retailers face ‘inventory crisis’ in evolution of global supply chain woes

A new report by Unleashed has found that UK clothing and fashion businesses are holding 57 percent more stock compared to pre-pandemic levels as new supply chain challenges come to head.

In its ‘Manufacturers Health Check’ report, the firm analysed more than 4,500 SMEs through four data points; value of stock on hand, Gross Margin Return on Inventory (GMROI), fulfilment days and the price paid for goods purchased.

In its research, Unleashed said there was evidence that businesses had been forced to stockpile “huge quantities” of goods, with clothing and fashion manufacturers seeing the seventh biggest increase in stock hand levels of any sector for Q3.

Plastic and rubber products, however, saw the largest increase at 180.88 percent, when compared to the same period in 2019.

Unleashed noted that clothing manufacturers were feeling the impact of holding more stock, with the majority of firms reporting a drop in overall profitability.

Clothing firms saw a decline of 81.8 percent in overall GMROI, compared to that of energy and chemicals, down 62 percent, and food, which lifted GMROI 93.69 percent.

In terms of fulfilment times, clothing firms were said to have been able to make a slight cut compared to pre-pandemic levels, falling 27.8 percent.

In the report’s release, Gareth Berry, CEO of Unleashed, said: “What started as a supply chain crisis appears to have evolved into an inventory crisis at the individual business level.

“Yes we've seen shipping times and prices ease, but that’s at the expense of firms who are forced to hold far more stock just to stay operational.

“It’s a tough situation for fashion and clothing manufacturers that will present real cash flow pressures. Managing those stock levels down in the coming months will be a delicate task.”