OPINION: Category analysis is crucial to weathering the cost-of-living storm – Amit Puntambekar, Ash’s Shop, Fenstanton, Cambridgeshire

Amit Puntambekar recommends looking at higher-margin categories where you don’t need as much volume

The increasing prices coming through remains the main challenge for retailers. Summer will hide some of the future contraction, but there’s only so much you can increase prices before consumers stop shopping with you. It’s a really hard balance right now.

The warmer weather will keep people purchasing – fresh food, beers, wines and spirits, soft drinks and ice creams. But long-term, it will be about trying to hold onto sales. We should be looking at how much we can afford to lose before we look at changing operational models.

It’s a bit pessimistic, but I’ve got minimum targets I need to hit. If the numbers start tracking behind those targets, I’m going to have to start having some honest discussions because it’s not a financially feasible way to run a business.

I’d say it’s a good time to expand your food-to-go operation, but if you wanted to target this summer period, you should really have got that organised back in February. Maybe we need to be looking at higher-margin categories where you don’t need as much volume.

I have spoken to people whose stores aren’t offering as rounded a convenience package as before and are instead going more specialist. We’ve been asking ourselves this question as well. Tinned grocery and meat – for example, Fray Bentos or Princes – the modern shopper doesn’t seem to purchase these products any more. Is there demand there for them? I don’t think so. I’m thinking of removing these products and using that space for specialist categories that offer higher margins.

I want to remove 100-200 ambient lines to make space for products imported from the USA and Japan. At the moment, we don’t have the space to display a full range. It’s a tough category, with high shipping and handling fees, supply chain issues and the need to be constantly on the ball looking for the next big thing. But it’s potentially a more rewarding category if you can get into it. In the summer, we do really well with toys from what is a tiny section. Maybe it’s worth expanding that area?

When the gas prices rise again in October 2022, and again in March 2023, disposable income will be hammered. I think we’ve got a challenging first quarter of next year. But I think trade will be good for the next six months. Retailers, though, shouldn’t be monitoring net sales, this will be skewed by inflation and could be misleading. They need to look at net volume – how many products are you selling? Look at your categories and find out what’s selling, and what is not selling.

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