CFO survey: 55% of retailers to raise prices in 2022; No. 1 risk to business is …

Marianne Wilson
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Rising transportation costs ranked as the top supply chain threat in BDO’s 2022 Retail CFO Outlook Survey.

Supply chain threats are translating into rising prices for consumers.

That’s according to BDO’s 2022 Retail CFO Outlook Survey, which polled 100 retail industry CFOs with revenues ranging from $250 million to $3 billion in October 2021. To boost revenue amid an inflationary environment and ongoing supply chain issues, 55% of retailers will raise prices in 2022 — 38% already have. Some retailers are taking more drastic measures: More than 25% are planning to restructure or reorganize this year.

Supply chain disruption was cited as the number one risk to business by the surveyed executives. Rising transportation costs ranked as the top supply chain threat, cited by 52% of executives, followed by supplier risks or delays (38%), supply shortage (37%) and higher customer expectations (34%). All of these factors translate to rising prices and product shortages and, in response, retailers are largely passing on these costs to consumers, according to BDO.

Other key takeaways from the report are below.

  • Counting cash: Forty-five percent of retailers said they have less than three months’ cash on hand and 43% said they want to keep more cash on hand to mitigate future turmoil.
  • Buy American: Nearly half of retailers plan to source the majority of their products from the United States in 2022.
  • Fears of falling behind: Thirty-eight percent of retail CFOs said falling behind on digital adoption poses a significant risk to their business.
  • Debt: Debt amounts varied by company size. Retailers with revenue under $500 million took on more debt than their larger peers as their path to recovery proved harder. However, in 2022, companies of all sizes plan to take on more debt as they continue to invest in supply chain management, refine ordering models like BOPIS, and improve in-store and e-commerce customer experiences.
  • Revenue: Overall, 26% of retailers expect revenue decreases in 2022, down from 44% that expected a decline at the beginning of 2021. 

“Retailers are bouncing back from pandemic lows, but their optimism remains tempered against the anxiety of a changing business model of offline and online access that consumers demand,” the report stated.

Retailers’ performances also vary depending on company size and vertical: Big-box and discount retailers are more likely to indicate their business is thriving, versus smaller retailers and department stores, which tend to be surviving or struggling. 

The BDO survey covered retailers’ overall health, risks and digs specifically into plans and challenges related to supply chain, innovation and resilience.