Supply chain pressures slow down retail growth

Continued supply chain pressures, including cost increases, delayed materials and shortages outrank workforce challenges and increasing business costs as a main concern for over a third (36%) of mid-sized businesses, according to latest research from accountancy and business advisory firm BDO. The bi-monthly survey, which was conducted on 500 medium-sized businesses, reveals over three quarters (77%) are facing persistent disruptions within the supply chain. Faced with these prolonged pressures, almost half (49.8%) of mid-sized businesses say they will be focusing on onshoring as much of their operations as possible in the next 12 months. This change in strategy is having the biggest impact for mid-sized businesses within the retail and hospitality, manufacturing and technology and media sectors with just over half (51%) planning onshore operations, suggesting an urgency to reduce a reliance on imported goods and overseas suppliers. A quarter of businesses say their supply chain strategy is focused on reducing the impact of global geopolitical events on their business, whilst the same number wish to avoid complex post-Brexit customs regulation. However, despite many making attempts to onshore operations, over 21% of businesses report that costs are too high in the UK. A further 20% say there are no UK-based suppliers capable of delivering the services they need. Motivated by access to more competition, almost a third hope to find lower costs in markets with a wider range of suppliers. Businesses are calling on the government to incentivise more UK operations, in order to boost economic growth. When asked about what policies would help their businesses grow this year, a fifth want to see tax cuts for companies working with domestic suppliers and /or partners. Ed Dwan, partner at BDO LLP said: “While the Covid-19 pandemic and Brexit have fallen out of the limelight somewhat, the supply chain pressures we’ve seen over the past few years are far from easing. Our latest research shows that mid-sized businesses continue to face persistent chaos and disruption, both at home and abroad, with many choosing to onshore operations to the UK, but still facing major barriers in doing so. “These businesses should not be overlooked by policymakers who need to prioritise domestic partnerships and industry, as without the right support to help manage lingering supply chain challenges, they could see a knock-on impact on plans for improving productivity and UK market growth in the months ahead.”