Profit margins hit hard as pricing strategies struggle to keep pace with supply chain issues, Covid and Brexit
A vast majority of UK businesses are struggling to manage market fluctuations caused by supply issues, Covid-19 and Brexit and UK organisations lose out on £451,000 every year on lost productivity, thereby hitting profit margins, according to new data shared with Morning Wire this afternoon.
A recent study conducted by Forrester Consulting on behalf of intelligent pricing platform Flintfox International reveals that 92 per cent of UK organisations lose out.
Companies with outdated practices around pricing face will struggle to navigate the complexities of unpredictable supply chains.
2022 will see business model transformation pushed up the boardroom agenda as global change becomes increasingly unpredictable, with half (50 per cent) of UK businesses claiming that poor data quality and capture is hampering the ability to keep on top of market fluctuations, the study found.
Profit margins scrutinised
As the UK battles ongoing supply chain logjams caused by Covid-19, complexities arising from the stop-start nature of demand for goods, and significant changes in UK/EU trading, the research has highlighted the challenges facing retail, manufacturing and consumers goods industries.
Hit severely by a slow supply chain recovery, they are undergoing a period of transition where profit margins have come under intense pressure.
Moreover, pricing strategies are forced to undergo a transformation.
Due to Covid-19, 55 per cent of UK firms renewed focus on creating a pricing strategy that maintained demand and managed margins. 66 per cent want their pricing initiatives to help them stay ahead of complex pricing changes at all stages of the supply chain.
However, 92 per cent of these businesses report that Covid and Brexit has been having a critical impact on the ability to manage pricing across their product range, with 32 per cent stating they are unable to keep up with the scale of real-time price fluctuations occurring in the market.
This is having a significant knock-on effect; with UK businesses losing on average £451,000 a year in lost profitability due to their inability to respond quickly enough to market forces.
Margin management
Existing business models are preventing businesses from being able to manage the pace of change, with 34 per cent still relying on manual processes to manage price fluctuations.
“After the continued uncertainty of the pandemic, margins have never mattered more,” according to John Moss, CEO, Flintfox.
Moss told Morning Wire this afternoon that “as inflation and supply chain issues continue to wreak havoc, it’s becoming increasingly critical for businesses to be able to respond rapidly to market fluctuations.”
The research indicates that a shift to real-time, automated management of pricing, will be a fundamental business priority to manage the impact of global disruption in the year ahead, with almost one in five (18%) UK businesses set to invest in intelligent pricing technology in 2022.
In fact, the UK has potentially the most to gain from intelligent pricing. 34 per cent of UK businesses approach pricing on an ad-hoc, case-by-case and manual basis – the highest across all markets surveyed (average globally is 26 per cent).