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Retailers React
Brexit Price Rises in Convenience
In June 2016, the UK voted to leave the European Union. During the referendum campaign, research projecting post-Brexit price rises was released. Since, reports of wholesale price rises on products such as Marmite have lead to shortages in supermarkets.

What goes on in UK supermarkets can often have an impact on convenience retailing so, we asked retailers whether they believed that Brexit price rises would have an impact on their business.

Of the 120 responses received, over 75% (91) of retailers believed that Brexit price rises would have an impact on their business..

Do you think Brexit price increases will impact on your business?

  • 75.8% Yes
  • 24.2% No
We approached retailers on both sides of the argument for their opinion regarding Brexit and price rises. We received various responses…

Calum Duncan – Former retailer, Kincraig

Calum Duncan is a former award winning retailer from Kincraig, Scotland who is well known for his innovative ideas and ability to turn a small village store into a nationally acclaimed success.

He was one of the 91 retailers that voted Yes, that Brexit prices would have an impact on convenience stores and shared with us his thoughts on the future.

"I don’t think you’ll see the impact straight away, but there will definitely be one. I’m not sure the increase in prices will have much of an impact on business however as it’s going to be across the board, everyone will get more expensive” – Calum Duncan

Pardeep Sarkaria – BK Stores, Immingham

Pardeep Sarkaria runs BK Stores in Immingham with his Brother Randeep. His family have been in the retail business for decades and the brothers have recently started to concentrate on improving the turnover and customer experience of the store. In 2015, they won a variety of accolades throughout 2015 & 2016. We visited them late last year to get to know their business and how they had achieved so much in just 18 months. You can read the profile here.
"Prices creeping up are nothing new, this has been happening for the last year or so. For example, the price marked butter we sell has increased in price by 25%. I don’t think it’s just down to Brexit though, prices seem to be going up everywhere, regardless of the EU. Prices are especially important in my area of Immingham but as long as the prices rise at the supermarkets as well then I think the public will just make do… – Pardeep Sarkaria

Paul Butler – Tamerton Village Stores, Plymouth

Paul owns Tamerton Village Stores in Tamerton Foliot, Plymouth. Like Pardeep above, he believes the price rises aren’t just being caused by Brexit but by other factors on the supply side. He also believes that the picture isn’t all bad, with more money flowing in the economy thanks to the recent substantial increase of the minimum wage.

As an experienced retailer, he has a plan to combat these price rises.

"As I always have done, I will negotiate prices and if necessary, change suppliers to give my customers the best possible deal and maintain my profit margins. If individual product rises are excessive or manufacturers try to cut my margins then I will look for an alternative or delist. With huge rises to wages recently, especially at lower income levels, I believe consumers still have money to spend. There may be a slight down turn in the short term but people will get used to the new prices. The biggest threat to our business and staff is the ever increasing minimum/living wage – Paul Butler

Alan Mellor – A & A Convenience Store, Tamworth

Alan Mellor, owner of A & A Convenience Store in Tamworth approached us with an interesting perspective regarding the current resilience of the supermarkets and the impact this may have on the convenience sector.
"In 2009 the Pound was almost on parity with the Euro. Although newsworthy at the time, we as a country rode it out and eventually saw it recover. Even though the exchange rate was affected by Brexit it was nowhere near as bad as in 2009, but most manufacturers see it as an opportunity to increase prices and blame it all on Brexit (mainly because most of them were pro-European). The major supermarket chains have already shown that they will stand their ground over any proposed increases, so manufacturers fearful of losing business are caving into them. This means the only way they can implement a price increase is via small retailers who have no power to stand up to them. This is where my main fear lies, because if this does happen the gulf in price difference between large and small business will just widen – Alan Mellor
As it was during the referendum, opinion is certainly divided on the future impact of Brexit on pricing and the impact this will have on convenience retailers. What is clear from these responses is that retailers are already planning for this, have faith in the British consumer and that from their perspective, the living wage is a far bigger threat to their business than Brexit.
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