What can independent retailers do in the face of rising costs?

Q&A with Andrew Goodacre, CEO of the British Independent Retailers Association

Q How is rising inflation affecting independent retailers?

The sudden rise in inflation is squeezing retailers in two ways:

• Causing a cost-of-living crisis for consumers, damaging consumer confidence and reducing expenditure. We are already seeing retail sales slowing down and with the constant reference to worse news in the Autumn, it is likely that shoppers will become even more discerning. We are also seeing a change in expenditure with much more being spent on holidays and occasions which is understandable given the uncertainty of the last two years. However, this means less spent in the shops selling comparison goods.

• The second major impact is the rising cost of running a retail business with costs rising even higher than consumer inflation – energy up 250%, business rates up 100%, supply chain inflation still double digit and wages more than 10%. All this happening with lower demand making it impossible to protect the overall profit margin.

Q Is it possible to protect margins in periods of rising prices?

This is the highest inflation we have seen for 30+ years and for many small retail owners, this is a new experience. Protecting the margin will depend on smart product/stock management. We have advised members to reduce stock level on slow-selling items; if cash flow allows, buy more in advance of the more popular lines if you expect prices to increase; price future inflation into the actual retail price.

Q How can independents best preserve customer relationships at times like this?

Despite the challenges of the high street, there is still a loyalty to shopping local that we saw take shape during the pandemic. It is crucial for indie retailers to not lose sight of this and not take customers for granted. Continue to connect and engage with the local community. It is also even more important to work with other businesses on the high street (retail and non-retail) to create a local plan that truly brings the community together.

Q At a time of wage inflation, how do they engender staff retention and a sense of belonging?

I do not think that indie retailers have ever relied on wages to attract and retain quality staff. The advantage the small business owners have as employers is that they can really get to know their staff as people (as opposed to a number in a large corporate). The small employer needs to focus on flexibility, involvement of staff in the business and share challenges with them. Whenever I visit members in their shops I am always bowled over by the sense of pride the staff have working in that shop – do not lose sight of your people who are in fact your most important asset.