How to balance costs and prices even as shoppers are cutting back

With costs on the rise and customers’ ability to spend hindered, the betterRetailing team finds out how retailers are maintaining prices to keep shoppers coming back

1Jason Birks, Moscis Convenience Store, Peterlee, County Durham

“There are price-marked products around at our wholesalers, but they are starting to move them away now because it’s harder for us to get a decent margin, particularly with confectionery. The market is so volatile at the moment and often something that was price-marked at £1 is now £1.15 or £1.25. They’re taking those items away to allow us to price them ourselves and keep our margins.

“Ultimately, you want that 30% and you have to price accordingly. People understand that prices are going up. It’s not just in convenience stores, it’s in supermarkets now. It’s the new normal and I’ve not had any negative feedback. But it’s about raising prices incrementally to keep that margin.

“The biggest challenge is on essentials like milk and fresh products because they’ve had price increases lately and we can’t pass that on as much. But people know what’s happening.”

2Mike Mitchelson, Mitchelson’s News, Brampton, Cumbria

“There’s always a balance between factoring your own costs into your retail price while being competitive with your opposition. In some cases, there are a lot of products that are price-marked, and with that you are stuck with a fixed price. With some of these – newspapers and magazines, for example – those prices have gone up and our hands are tied.

“You’ve got to look at where you can increase margins to absorb your own extra costs. We do a lot of stationery and greetings cards, and we can get a lot of flexibility on our prices there and we also have a bit of a unique market in our store. By doing that, we can offer prices on other products that keep us competitive with nearby stores and then recover some of that cost.

“With other products, like alcohol, confectionery and soft drinks, it’s a case of having a mix and match of price-marked and non-price-marked packs.”

3Umang Shah, Tudor Library & Post Office, Croydon, Greater London

“We’ve increased the prices on things like stationery and printing paper, but the margin is still not quite as much as it used to be. Before we could get it at £2.20 and sell it for £5.50, but now I’m buying it for £5.50 and selling it at £8. So, there’s still a margin there, but there’s also a higher price. We’ll see how it goes and wait for things to get better.

“The other thing that retailers can do instead of raising prices on products is to keep costs down, and the biggest thing you can do in that regard is to manage the hours your staff are working. That’s a big cost-cutting exercise. It’s hard at the moment because busy-ness in the post office isn’t as predictable as it used to be, but customers are understanding and they are often happy to wait if there are big queues unexpectedly. So, I have reduced some hours for my staff and that will save a lot more than any other part of my business.”

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