‘Retailer focus is on how to help customers caught in cost-of-living crunch’

I cannot remember a time with as much disruption as the last two-and-a-half years. A pandemic, three lockdowns, an HGV driver shortage, the ‘pingdemic’, a huge investment in digital and a decline in footfall yet to fully return. 

A war in Europe, creating untold suffering in Ukraine and creating reverberations through supply chains around the world. And now a cost-of-living crisis – with inflation at a 40-year high and little end in sight. 

“The UK may be the world’s sixth-largest economy but it is still being bludgeoned by external inflationary pressures from around the world”

Many retailers tell me the current environment is worse than at the height of Covid. They find themselves squeezed between higher costs from all angles, multiple logistical issues and lower demand from their customers. 

A tight labour market leaves many businesses struggling to fill essential roles. Wage bills are rising fast. Global commodity prices have increased precipitously – the FAO Global Food Price Index is up 22% in the last year alone. 

Energy costs – uncapped for businesses – are soaring. Shipping and road freight costs remain a massive burden. And the government has introduced National Insurance rises and a plastic packaging tax, and removed almost all business rates and other support and relief brought in during the pandemic.

Despite all this, the focus of industry leaders is on how to support their customers caught in the cost-of-living crunch. Value ranges have expanded, discounts have been introduced for vulnerable customers and many cost rises are being absorbed by retailers.

Economic slowdown

Looking forward, retailers continue to seek cost savings across their operations and many have pledged to invest in lower prices in the future. Perhaps most importantly, many are raising pay to help colleagues and their families cope with the economic onslaught.

Unfortunately, things are not going to get better any time soon. The Bank of England forecasts inflation to continue to rise this year with an economic slowdown to boot. The UK may be the world’s sixth-largest economy but it is still being bludgeoned by external inflationary pressures from around the world. 

The British Retail Consortium remains committed to pushing for any mitigations that can help the industry deal with this backdrop. We lobbied for the delayed border check changes and helped push back the scheduled implementation of extended producer responsibility, which would have cost the industry billions of pounds.

Such changes of heart from the government are important but there is more they should consider. 

Unfortunately, with the government contending with turbulence of its own (an understatement, perhaps?), this may prove more difficult than in the past, but that does not mean we should not continue to try to persuade it.

“Sometimes, it is just better for government to get out of the way”

The government can help raise productivity and take steps to mitigate the tight labour market by making the apprenticeship levy more flexible, so businesses are in a stronger position to draw down on their huge training funds. 

The government could find ways to make markets work better. The ongoing consultation on transitional relief for the next business rates revaluation in 2023 is a crucial opportunity for policymakers to address the burden of rates in the short term while working on longer-term, meaningful reform. 

By abolishing the downwards phasing of transitional relief, the government would stand by its aims to make the rates system fairer and support the parts of the country that need it most. 

The government could also look at its legislation pipeline and focus on the important, bigger-impact things, rather than legislation that becomes the means rather than the ends. Sometimes, it is just better for government to get out of the way.

So, lots to play for. While I cannot remember a time with as much disruption as the last two-and-a-half years, I also cannot remember a time with so much resilience, innovation, determination and courage as I have seen from the industry and the millions of people who keep it together.