Retailers may need to pass cost increases on to consumers

0

After 18 truly amazing and difficult months, every industry in the country has been affected in one way or another. The retail industry is no different and as such it is worth thinking about the challenges that remain for retailers, as well as the real opportunities that exist for the industry.

It is gravely ironic that as the effects of the pandemic wore off, desperate retailers have been hit by several issues, including significant supply chain issues and an energy crisis that has resulted in soaring prices for retailers. goods and services.

All of the country’s conventional utility providers have announced double-digit increases in the cost of energy this year, while the cost of a sea container from the Far East is now at least four times what it is. that he was around the same time last year.

Asian manufacturers have been hit by forced lockdowns from Covid, with ripple pressure evident in Europe’s largest ports such as Rotterdam. Uncertainties related to Covid lead to cautious forward purchases by consumers, while product supply through the UK has been affected by Brexit.

Indeed, falling demand during the lockdown followed by increased sales as economies reopened made forecasting very difficult for retailers.

Rising costs and unpredictable demand are putting great pressure on margins. Retailers are trying to control prices this Christmas, but price hikes are expected to follow next year, as retailers may have no choice but to pass the cost on to consumers.

Unfortunately, the challenges do not end there. Retailers are still grappling with significant legacy debt after nine months of forced shutdown.

Staffing is a major issue in the retail industry, and employers are struggling to fill vacancies at a critical time. Additionally, retailers have reported that many foreign workers who returned home during the pandemic have not returned, putting additional strain on staff.

Support from the State of welcome

Government grants have been welcome throughout the pandemic. There have been four deployments of the Enterprise Ireland online retail program aimed at helping retailers with more than 10 employees get online. Not surprisingly, these programs have been oversubscribed.

However, small retailers with fewer than 10 employees – the ones arguably most in need of help – cannot and are short of this level of funding.

While retailers are clearly still navigating a perfect storm of increased costs, supply chain issues and staff shortages, there is light at the end of the tunnel for industry in Ireland.

This year it is more important than ever to support Irish retailers and suppliers, who are independent of international trade and can thus respond more quickly to trends in demand. It is important to note that going to an Irish supplier is also a more sustainable choice.

While it may be more difficult to get hold of the products you want this Christmas, there will likely be an extended sales window in the New Year, which will give retailers a much needed boost during what is. generally a fallow period.

The government can help by updating and streamlining relevant visas for foreign workers and easing restrictions on student employment. In addition, an extension of the online programs to include our smaller retailers would make a significant difference.

Role of local authorities

After the pandemic, city councils have the opportunity to reimagine the way we live, work and shop in our city centers. The post-pandemic recovery has already started, but it is clear that some areas are lagging behind like Dublin and, to a lesser extent, other cities like Cork and Limerick.

In Dublin, attendance is still down 30% from pre-pandemic levels, mainly due to a significant drop in the number of office workers and tourists. City councils and government need to be creative in getting people to return to urban centers in the short term, and start thinking about how we want our cities to look like in the medium to long term and plan accordingly.

The retail industry has gone through the most difficult times it has ever known and its troubles are far from over. However, if we make the right decisions now, we can reap the rewards next year and beyond.

• Duncan Graham is Managing Director of the Retail Excellence industrial group


Source link

Share.

Comments are closed.