Retailers say their overheads have soared by up to 50% in the past decade. And some are now warning that if things don’t change many independent chains could go out of business.
In a poll of the bosses of our Top 50 leading independent retail chains, the national minimum wage, the price of renewing alcohol licences, soaring utility bills and making stores chip & PIN compliant were having the biggest impact.
One Top 50 retailer said the increase in the cost of licensing his premises to sell alcohol under the new Licensing Act 2003 had been “off the scale”. He added: “Electricity costs have doubled in the past 10 years and wages have increased by 10%.”
Another retailer told us that the rise in the minimum wage had “far exceeded everything else we have suffered”.
Most Top 50 chains did not think costs would go up as much in coming years. But some admitted this could be a case of wishful thinking.
“I hope they won’t go up by the same rate,” said one leading retailer. “Inflation was higher a few years ago and it’s low at the moment. The bottom line is we can’t afford costs to go up as much in the next 10 years or we’ll go out of business.”
He added: “Wages will go up by 7% in the next year and the price of fuel for store deliveries is going through the roof.”
Our poll came in the same week that the government admitted it had failed to ease the burden of bureaucracy on business. It has begun consulting on a new Bill that will help it cut unnecessary red tape.
The BRC said: “While we welcome the consultation, it is important that the proposed Bill produces results in practice. We don’t want things to be left on the shelf to gather dust.”
However, many smaller retailers believe the government could already have done far more. They point to the fiasco over its new licensing rules - which has left retailers reeling from massive hikes in costs.
Richard Barnes, owner of Spar retailer R&D Barnes in Thetford, said his licensing costs were going up twenty-fold. With a rateable value of £8,800, Barnes will have to pay £622 over a three-year period, compared to the old charge of £30.
“This is a body blow,” said Barnes. “It is an absurd increase in tax that will hurt my business and make it harder to compete, as I will have to absorb the costs out of my own pocket.”
Michael Quinn, owner of Quinns in Lancashire, will see a 10-fold increase to his licensing costs. “Costs are rising all the time. I feel very angry.”
>>p26 The cost burden: it can’t go on
Rod Addy