The liquidity of independent retailers is being stretched to breaking point, buying group Sugro UK has warned.
The continuing deterioration of the economic climate meant indies were taking longer to pay their bills - and the situation was expected to get worse, Sugro UK MD Philip Jenkins said.
“Payments are becoming more difficult to obtain,” he said at a half-year trading update last week. “Some retailers are desperately under pressure because of the costs incurred in running their business, and because the value market is putting their retail margins under pressure. I think the second half is going to be a bit of a challenge.”
These pressures were being felt across the UK, Jenkins said. “I recently visited a store in the South West. The owner is worn out. She’s not making enough margin and can’t take any time off.”
Countlines were a “classic example” of the sort of challenge retailers were facing, Jenkins added. Sales were falling because shoppers were choosing to buy multipacks instead, meaning retailers weren’t getting the premium price they used to get.
Price-marked packs weren’t helping matters, he warned. “All price-marked packs do is create a ceiling of shared margin,” Jenkins said. “Just because a product is price-marked doesn’t mean more people are buying it. A big proportion of products are going to become price-marked going forwards.”
Despite retailer woes, Jenkins said growth to the end of June at Sugro UK was running at 12%. Although the second half of the year would be difficult, Jenkins predicted Sugro would still end the year in growth.
Meanwhile, Sugro UK is developing its symbol facia Nearbuy. It now has 18 stores and is concentrating on opening a number of stores in one area so that it can carry out “cluster marketing” in local newspapers.