Re-opening businesses confident despite challenges

A KPMG survey of 90 retail and hospitality businesses reveals 80% expect their performances to hit pre-Covid levels over the next 12 months

This optimism comes despite ongoing concerns around labour shortages and supply chain issues.

“Supply chain issues are clearly a major hurdle to overcome for retailers, especially their impact on inventory volume and availability in the run-up to Christmas,” says James Stewart, KPMG’s National Leader for Restructuring Services.

“Higher labour and freight costs are placing pressure on margins and these costs may ultimately be passed on to the consumer through higher prices by impacted retailers.”

Peter Marczenko, KPMG National Sector Lead for Mid Market Food and Beverage, says closed borders and labour shortages in hospitality could lead to ‘menu inflation’, driving up the cost of eating out.

“Shortages of skilled workers are especially evident in hospitality,” he says.

“Chefs, for example, are critical for successful re-openings after extended lockdowns, but lack of migration has made it hard for businesses to find and retain them. This could make trading over the summer holidays difficult in what is normally a peak period for the sector.”

The re-opening of borders and lifting of travel restrictions should provide some relief to businesses. Nearly three-quarters of respondents said this was ‘vital’ to their chances of success, with domestic travel and international migration a key factor in the labour market for retail and hospitality.

Key findings

  • 70% say supply chain issues will impact cost of goods over next 6-12 months
  • 76% say labour shortages will impact their business over next 6-12 months
  • 43% say ongoing covid restrictions would impact profitability
  • 73% say re-opening of state & national borders is crucial to their business
  • 80% were confident they can get back to pre-Covid performance levels within a year, despite the challenges facing businesses.

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