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The Christmas peak is expected to come earlier than ever in 2010 and
retailers need to ensure that their supply chains are prepared to cope
with this significant development or they risk missing a key
opportunity. This is one of the findings of a new white paper that has
been developed by OPS Logistics Consultancy about the affect of the
recent emergency budget and the forthcoming VAT rise, and which measures
the potential impact on the supply chain.
“Retailers need to start planning now if they are to take advantage of both the opportunities and challenges the VAT rise will bring, and this is likely to have a major impact on the logistics sector,” according to Dan Derry, Managing Director of OPS. “With the tax changes occurring in the middle of the peak, (note: Peak is Oct to early Dec; VAT is not until Jan) this will not only encourage the consumer to buy earlier this year to beat the rise but also create spikes in the demand to put increased pressure on the supply chain.”
Consumer trends show that consumers tend to avoid paying extra tax by buying large ticket items before any tax increases, such as the 2.5 per cent rise in VAT that was announced by Chancellor of the Exchequer George Osbourne. With the increase planned for 4th January, this will coincide with the Christmas peak and therefore affect usual buying habits.
The paper explains that in order to meet this change, businesses need to ensure that their respective supply chains have the flexibility to meet these future challenges. Companies must review their entire supply chain to ensure they have the best value for money approach and can ensure customer satisfaction, whilst having the adaptability to quickly meet a changing economic climate. Those that follow this process will be in a much stronger position to weather any downturn, which might materialise.
“The biggest challenge this year is not only coping with an unusual peak but also the subsequent slump,” explains Derry. “Post Christmas can always be a hit or miss affair, depending upon sales and consumer response, but this year we predict it to be quieter than normal, as consumer spending habits change in line with the effects of the budget and because people have less disposable money available. Therefore, logistics operations need to be planning ahead and being proactive to find alternative uses for supply chain resources or looking where infrastructures can be streamlined.”