There is currently a cost of living crisis in the UK, with many people starting to feel the squeeze on their budgets.
If you are responsible for a retail store, you may be concerned that this may impact your business and the amount of revenue you generate.
Here is our guide to the cost of living crisis, how it may affect your customers and how you can mitigate against a potential loss of revenue.
What is the cost of living crisis?
The cost of living crisis consists of a combination of factors that is causing many households to feel the pinch.
The UK Government implemented a rise in National Insurance and increased the energy price cap in April. This will lead to higher gas and electricity bills, as well as less take-home pay.
Councils across the country are set to increase taxation levels to ensure essential services are maintained and to cover the costs of two years of lockdown.
Inflation rose to 5.4% in December, the highest rate in 30 years and is predicted to climb to 7% in the next few months. This means people will have to spend more on food and petrol as well as see an increase in their mortgage or rental bills.
The Bank of England has stated this is the worst cost of living crisis since records began over thirty years ago and is likely to last until 2023.
How will the cost of living crisis affect my business?
The cost of living crisis is not only affecting members of the public, but businesses too.
Retailers with a brick-and-mortar presence will be affected by rising energy bills as well as an increase in the cost of wholesale products and raw materials, caused by inflation.
This is likely to lead to many retailers increasing their prices. It’s estimated that over the course of the year, customers will see their grocery bills increase by £180.
Not only this, but if customers have less disposable income, they are more likely to forgo the ‘nice to have’ items they used to enjoy.
How can I ensure my retail store is affected as little as possible?
If you run a retail business, the cost of living crisis leads to maintaining a delicate balancing act. While you want to cover your overheads, you also want to do what you can to keep your loyal customers happy and attract new shoppers.
Here are our top tips for managing the impact.
- Review your supply chain. Now is an excellent opportunity to look at your suppliers and see how the cost of living crisis affects your business. Can you negotiate any discounts or find new suppliers?
- Focus on your pricing and promotional offers. Are there any special offers you can implement to entice customers into your store? An eye-catching POS can help you stand out from competitors and bring in new customers
- Continue to provide excellent customer service. Offering an exceptional in-store experience makes you more likely to retain existing business. Nearly three out of four shoppers see the shopping experience as a more important factor than price.