The latest challenge facing UK retailers is growing inflation. At a time when customers and retailers alike have been affected by rising energy and fuel prices, inflation has the potential to make matters even more difficult, particularly when it comes to essential purchases like milk, bread and eggs.
“The price of milk has increased six times, from £2 for 2l six months ago to £3.20 now,” says Faisal Naseem, who runs two stores in Arbroath, Angus. “As a household staple, it’s a product that people are going to notice when prices go up drastically. It’s hard for retailers to keep the prices low though.
“My father, in 25 years in retail, has never seen price changes like this – as often or as high. We don’t know when it’s going to stop.”
Retailers wanting to look out for their customers and retain their loyalty must now run a balancing act between raising prices to the extent that they are unaffordable to shoppers, potentially driving them away, or keeping prices low and swallowing the loss themselves.
At a time when people have never been more price-conscious – checking prices on products they might previously have bought on autopilot – being aware of the prices offered by your immediate competitors is incredibly important.
Being able to quickly lower prices can keep you ahead of the competition and could make the difference in customer loyalty. This could see retailers lose out on margins, so finding other ways to claw this back becomes important, whether it’s looking further afield for cheaper options from other wholesalers and suppliers, or increasing the margin on other, less price-sensitive products.
Finding additional revenue streams will be incredibly important, so if your store isn’t offering home delivery, now might be the time to do it.
“With the rising cost of fuel, people are starting to look at delivery once again,” says Naseem. “Home delivery demand has slowed down compared with during Covid-19, but it’s still growing and the opportunity is huge.”