This year looks set for many things to become more expensive, with gas and electricity prices continuing to grow at alarming rates. While there are many things that retailers can do in store to keep their energy usage down, there are also ways that they can reduce their bills by sourcing suppliers carefully and negotiating the terms to get the best possible deal for their store.
“Definitely shop around and don’t just take whatever your current supplier is offering,” recommends Val Archer, from Biddulph Convenience Store in Stoke-on- Trent, Staffordshire. “Always question it. I find they’ll often send written quotations, and if you ring them and say ‘what on earth are you playing at?’, they’ll then offer you a lower quote.”
There are benefits and drawbacks to getting a longer- or shorter-term contract, and it is up to your instincts about which is the right one for you. With energy costs volatile at the moment, it might be tempting to go for a longer-term one to offset any potential increases down the line, but that runs the risk that you’re left paying peak prices when they drop.
“You’ve got to be careful you don’t sucked into something,” says Archer. “If you fix yourself for four years at the top of the market and then something happens and prices come down, you’re trapped. Previously, I would do contracts for one or two years, but I was very lucky and found a four-year contract last year before the prices went up.”
Smart meters are also something retailers should consider, but they must be aware of the disruption they can cause.
“We haven’t installed a smart meter because it would mean shutting everything down for 15 minutes and we’re trading all the time, so it would cause problems,” says Ronak Patel, who runs Budgens Arbury in Cambridge.
Ask for advice if you’re unsure
A retailer has more than enough on their plate already without adding the task of finding the right energy deal for their store, so John Green, from Premier Green End Road in Sawtry, Cambridgeshire, has left the search for a good energy supplier to a broker called USC.
“I found them when I was working with the NFRN, and have stuck with them ever since,” he says. “They’ve handled everything, and done all the shopping around for me. They’ve got their own group of people they’ve worked together with.”
He also recommends talking to other retailers about their experiences to get a better idea. “Talk to other retailers,” he advises. “There are Facebook groups that I look at regularly and there’s always someone saying their energy-supplier contract is coming up, and they’d like energy-supplier recommendations and advice. That’s a source of information that’s quite useful.”
Beware of obscured costs
Ronak Patel, who runs Budgens Arbury in Cambridge, wouldn’t have switched providers had he not used a broker who helped him highlight an extra charge that was omitted from his previous provider’s quote.
“We used to be with SSE, and they were really good, but it was only when we met up with this broker that they pointed out [a charge missing from their quote], and when we made a more like-for-like comparison, they weren’t the cheapest after all,” he says.
It helped Patel that the broker he uses works with other Budgens retailers, meaning they are tailored towards helping independents get the best deal. When it came to his most-recent renewal date last August, Patel opted for a two-year deal. “I thought about a one-year deal, but I don’t think the market’s going to correct itself for another two or three years, so I thought I’d do a two-year deal and see where we’re at,” he explains.
Think about a smart meter
Sarj Patel, from Pasture Lane Stores in Sutton Bonington, Leicestershire, has been with Eon for a few years and has found it hard to find other suppliers that offer him deals that are better or that are different for his business. “We used to shop around, but there weren’t many better deals in real terms. It’s a lot harder to find a deal as a business now,” he says.
However, he has installed a smart meter into his store, which ensures that he can keep an eye on what’s happening at any given time. “You can see how much you’re spending all the time and keep a check on it to avoid any nasty surprises down the line,” he explains.
He has found that yearly contracts work for him and for his suppliers, who often don’t want to take on the risk of a longer contract with independent convenience stores in rural locations. He pays monthly by direct debit.
Don’t miss your window to change
There are good and bad times to think about changing your energy contract, and you should make sure not to miss your window, according to Val Archer, from Biddulph Convenience Store in Stoke-on-Trent, Staffordshire.
“It’s so important to check the ‘out of contract’ rates. If you’ve got a fixed contract, then you have to be well aware of when your window to change is,” she says. “You need to make sure you hit that window so you can avoid getting an out-of-contract rate. They’re generally higher than anything you can negotiate.
“The window has got bigger now, to around 12 months, I think, which makes it easier.”
Archer has always done the research herself, rather than using an agency, but it is challenging. “You can’t compare business rates online any more like you can with domestic rates,” she says. “You have to go on each individual website or go through an agency.”
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