As October approaches, convenience store owners across the country are getting more and more concerned over the viability of their businesses. While retail trade bodies continue to raise alarm on the matter, retailers are now resorting to help themselves by using tricks and tactics to cut down their energy bills as much as they can.
Over the last year, gas prices have soared to record levels as global demand intensified in Europe owing to low gas storage levels and a drop in pipeline imports from Russia, thereby further pushing electricity prices.
Earlier this month, energy regulator announced recently that it will raise its main cap on consumer energy bills to an average £3,549 from £1,971 a year and will recalculate the cap every three months rather than every six months to reflect current market volatility.
This spike in the bill is having a crippling effect on local stores. According to the Association of Convenience Stores (ACS), energy costs have skyrocketed to over £45,000 a year for an average small convenience store at around 1,000sq ft., more than doubling for many retailers. For larger stores around 3000 sq. ft., these costs can be in excess of £100,000 a year.
Overall, the spiraling cost of energy is expected to cost convenience stores at least £2.5 billion this year, ACS warned Chancellor last month.
Local shops have been UK’s lifeline. Earlier big supermarkets and e-commerce and later Covid threatened the viability of corner stores though they prevailed. But in the words of ACS chief executive James Lowman, the higher energy bills will makes some convenience stores “unviable” and they will be “forced to close”.
Over the Platinum Jubilee weekend Retailer Mukesh Patel was honoured with Her Majesty’s award in lieu of his services during the pandemic. In a span of two months, he is in a state of confusion over the future of his shop.
“I expect my bill to go considerably high from October. I dread to think what will happen to my shop,” Patel, who is running Capel News in Capel village in Surrey for 36 years, told Asian Trader.
Patel is not alone here as a recent survey shows that many business owners are equally perplexed, with some even contemplating shutting down. In a survey conducted at the end of August by Bira, 65 percent of business owners had said a price rise would force them to reduce the number of staff they had or reduce wages, while 40 percent were considering limiting opening hours, while 23 percent were looking to permanently or temporarily close their business once the proposed price hike came in October.
It is not only retailers but wholesalers are also facing this problem as their operating costs too have spiked exponentially.
Wholesaler Parfetts told Asian Trader how rising costs are touching all parts of the economy. The employee-owned company is doing all it can to mitigate the challenges for retailers, like offering easy and efficient delivery, flexibility of payments so that retailers can benefit from credit terms.
Wholesaler Bestway revealed how it is too dealing with a mountain of increased cost.
“At Bestway, our energy costs account for 10 percent of our total business operating costs. We are seeing energy bills now rising by 130 percent,” a Bestway spokesperson told Asian Trader.
However, some retailers as well as wholesalers have switched to new providers in an attempt to find ones that can offer a better deal. Retailer Imtiyaz Mamode of Premier store in Gosport is one such store owner who is not as hassled as his peer and is not dreading October that much, unlike his counterparts.
Retailer Imtiyaz Mamode
“I have a new contract with Octopus Energy lasting till 2024 under which my bill comes 2500 to 3000,” Mamode told Asian Trader.
“My bill amount was touching 4000 to 5500 pounds per month. It was getting too expensive so I started searching for a new provider. My present supplier has given me a fixed rate for two years and I am happy that I am able to save 1500 to 2000 pounds straight away.”
“If I decided not going with the fix and chosen fluctuating price instead, then at the moment, I might have been paying 4000 or 5000 easily more,” he says.
Bestway too stated that it has negotiated a new plan for the next 24 months in an effort to cut operating costs.
“We see this being a temporary increase but in order to try and stabilise the increased costs we have negotiated and agreed a new tariff from July 2022 for 24 months,” the spokesperson said.
Cut It Down
Patel of Capel News, as for now,is cutting down the energy spent in an attempt to keep the bill amount in control. He revealed how he is not using lights in some areas of shop “unless necessary” and now “switches off freezers at night”.
Echoing similar tactics, retailer Mamode advises his peers to invest in the store’s basics and get electrical that consume less energy.
“There are lot of chillers and freezers that claim to consumer 20 percent less energy. They are expensive but in the long run, they are always a better deal as they help in saving 15 to 20 percent of the energy bill,” he said, adding that “switching to LCD display” and “switching off freezer” at night are also ways to bring down the bill amount.
Convenience specialist Dev Dhillon agrees with Mamode here when it comes to equipment.
“Now is the time to purchase energy-efficient equipment, particularly refrigeration. The return on investment is now far more compelling than in the pre-energy crisis,” Dhillon told Asian Trader.
“Future-proof your stores and create a positive sustainability message for your customers.
Dhillon also advises retailers to pay for an energy audit of the business.
“It will benchmark your energy footprint versus similar-sized operations and identify equipment that may require maintenance or replacement.
“If you have a foodservice offer, implement it to high standards. Equipment like ovens now come with increased costs so you must ensure that you are getting maximum value from their use,” says the expert.
Earlier this month, British Retail Consortium (BRC) released a step-by-step guide for retailers to become energy efficient. Like Dhillon, BRC too advises retailers to review their equipment, clean filters of ventilators and heaters to ensure nothing is blocking air ventilation outlets and defrost freezers regularly.
Snippet from BRC's "Step-by-step guide: Energy efficiency and carbon reduction in the retail industry"
The guide also mentions steps like turning heating down by one degree (- 1℃ saves approximately six percent), keeping doors and windows closed and using signage on doors instead to say the store is open.
Bestway also stated that it is now being more careful about energy usage across the whole business and working through various ways to introduce energy efficient measures including more efficient lighting and regulating the use of energy more closely.
Food and Convenience retail industry expert Scott Annan warns that if business energy bills continue at the five-to-10-fold increase, then thousands will “shutter down”.
“Independents can draw on their reserves, increase borrowing or sell some assets to raise cash to pay these increased bills. Prices will have to rise at the same time as most of us cut back on discretionary spending such as a £2.80 coffee. A perfect storm!
“National and big retailers will have fixed or hedged their energy pricing through say mid-2023 as ‘best industry practice’. Fixing or hedging pricing at today’s rates is not an option. I know of restaurants that will pay their forward year’s rent and not open, the owners preferring to take a paid job,” Annan told Asian Trader.
In Annan’s words, recommendations of new kettles or aluminum foil behind radiators are “moronic nonsense and shows how out of touch MPs are of the real world”!
Clarion Call
Tackling the energy crisis was one of the main agenda for the incoming prime minister. Soon after assuming office, newly-appointed prime minister Liz Truss announced the much-anticipated support plan under which typical household energy bill will be capped at £2,500 annually until 2024 and six-month scheme for businesses providing equivalent support (to be reviewed in three months’ time).
Welcoming the announcement, ACS reiterated that help may be needed for local shops beyond the current six-month time frame while National President of the Federation of Independent Retailers (the Fed) said that the “devil is in the detail”. Both ACS and Fed have called for a price cap for local shops in line with the domestic market and longer-term support.
The Federation of Small Businesses (FSB) too welcomed the help but said the announcement was "sparse on detail" while BRC stated that businesses need clarity on the government’s intentions as soon as possible.
Some industry leaders have also raised concerns over how exactly the plan will work and impact the retail grocery sector.
James Bielby, Chief Executive of Federation of Wholesale Developers (FWD), welcomed the necessary intervention but also claimed that it “won’t prevent energy cost increases in the food supply chain being passed on to retailers and caterers, and ultimately to consumers”.
“It’s encouraging that the government is committing to supporting ‘vulnerable industries’ including hospitality after the initial six months of the scheme, but we will be working hard to ensure that food production and distribution are also on that list,” Bielby told Asian Trader.
FWD has written to the new Chancellor of the Exchequer asking for an energy price cap for two years, freezing business rates for energy-intensive industries, government-backed zero-interest loans to be repaid over 10-15 years to supply energy costs, and reducing VAT for the hospitality sector.
Bestway, meanwhile, warned that as a national wholesaler with thousands of independent retailers as customers, it is seeing almost all customers under cost of business pressure.
“Some retailers will not be able to mitigate or manage such increases and are at risk of going out of business. We would urge the government to put into play immediate measures to keep the energy cap for small businesses, which is currently under review by the government,” the spokesperson said.
Although the industry has broadly welcomed Truss’ plan, retailers’ bodies and wholesalers are uniting to raise an appeal to the government to provide long term relief to local businesses before some are forced to close down the shutters.
In the words of Fed National President Jason Birks, if the situation continues, it may only be a matter of time before communities lose access to the groceries and services that local stores provide – but more importantly “they will also lose a heart”.
Following the initial response condemning the Budget as 'the most damaging for independent retailers in recent memory' from the British Independent Retailers Association (Bira), members have shared their stark reactions to the triple burden of doubled business rates, increased National Insurance, and higher minimum wage costs.
Multiple retailers have calculated specific impacts on their businesses, with costs ranging from £90,000 to £150,000 per year.
"This budget was horrendous for us as a company. Estimated costs to be around £110,000 - £120,000 per year," said Andrew Massey of Masseys DIY in Swadlincote, Derbyshire.
The immediate impact on employment is already evident. Peter Massey of R Massey & Son Ltd, employing 38 staff, said: "We decided last night that we will not replace the next two members of staff that leave. We are also considering what to do with our coffee shop that employs quite a few youngsters."
Kevin Arthur of Pewsey RadioVision in Wiltshire highlighted the broader staffing implications: "The minimum wage rising to £25.5k per year (40hr week) is scandalous. Having to pay this type of salary for your most basic of employees will mean less employees, resentment amongst 'more valuable' staff who believe they are 'worth' far more than a basic employee, and less ability to pay staff bonuses. I am now looking to reduce staff hours, reduce staff numbers, and Christmas bonuses will be curtailed and any other 'perks' reduced."
A store owner in the South West, whose business has traded for over a century, revealed: "Prior to the budget we were looking at taking on a new store and creating 12 new jobs. The colossal impact that Labour has imposed on our business means that not only will this new store not happen, but we will be reviewing our sites and having to make redundancies in order to survive."
William Coe, of Coes in Ipswich, highlighted the challenge facing customer-focused businesses: "We all want the same thing – Growth – however for growth businesses need to make a profit to enable them to invest. With the cost rises put upon them yesterday this gets harder and harder especially for the retail and leisure sectors where the ability to make savings through technology is limited."
John Jones, Managing Partner of Philip Morris Direct in Hereford, warned: "We've been saying for months that the issue for small business is the cumulative effect of so many extra costs. These add up to a level of costs that just aren't sustainable, and I fear there will be a blood bath of small business on the high street."
The impact threatens the very existence of some long-established businesses.
A West Midlands clothing retailer with over 100 years of trading history confirmed they are "closing the doors in the near future," adding that "the cumulative effect of the rate hike, NI increase and the Minimum Living Wage increases mean that already emptying towns will become wastelands."
For smaller independents, the situation is particularly acute. Tracey Clark of Albert's Hardware in Somerset revealed: "I work in excess of 70 hrs a week with little to no personal financial gain. I can't see myself surviving the next six months."
The disparity between high street retailers and online competition was highlighted by several members, with concerns raised about UK-based businesses bearing the cost burden while international competitors selling cheap imported clothing operate with minimal tax liability.
A Greater Manchester fashion retailer emphasised the disconnect between policy makers and small business reality: "They are completely detached from reality. They need someone advising that has lived and breathed a small business. There should at least have been a threshold where businesses below a certain turnover aren't hit by these things."
The impact extends beyond retail to related sectors.
A West Midlands builders' merchant warned of broader economic consequences. The owner said: "The Government has put the boot in to small business. We are paying for everything. Farmers are in real trouble now and the economy will suffer. They went round telling businesses rates were unfair and would sort it out, then just put them up. They lied to us all and now jobs will go and inflation will rise."
Many retailers expressed frustration at what they see as broken promises. A Birmingham-based jewellery store owner said: "High Streets are the cash cow for Governments and when most have disappeared, they will scratch their heads and wonder why."
The combined impact of these measures threatens not just individual businesses but entire local economies. With many retailers already reporting worse trading conditions - Bira's recent survey showed 46% reported worse trading in early 2024 compared to 2023 - these additional costs could prove the final straw for many independent businesses.
Andrew Goodacre, CEO of Bira said: "For some, the Budget has forced immediate operational decisions. Several retailers mentioned reviewing staffing levels, reconsidering expansion plans, and in some cases, accelerating closure plans. The impact on future generations is particularly concerning, with multiple family businesses questioning their long-term viability."
A Midlands hardware store owner summed up the common challenge: "This will make trading near impossible with wage increases and the business rates, and no one wants to pay any more for goods."
Brocks at Rockwell Green, a Premier-branded convenience store near Wellington, Somerset is on the market as owners Simon and Rachel Brock are now looking to retire - after running the store for nearly 25 years.
Selling a wide range of products and everyday essentials, the store is “well-established and popular” among both the local communities.
“It has been a pleasure running the store for the last 23 years and serving the local community. It has been a tough decision to sell but we felt now was the best time to retire,” Simon said.
Specialist business property adviser Christie & Co has been instructed to market the property, which also features a variety of storage spaces, offices and independently accessed three-bedroom accommodation.
Matthew McFarlane, business agent at Christie & Co who is managing the sale, commented: “This is a fabulous store and property, offering a large sales area, great storeroom and residential accommodation. The sales figures are very strong which represents an excellent opportunity for corporate buyers or established multi operators.”
Wrexham Lager Beer Co Ltd, the oldest lager brewery still existing in Britain that has been brewing in Wales since 1882, has announced Rob McElhenney and Ryan Reynolds as new co-owners of the company alongside the Roberts family.
The acquisition was made by Red Dragon Ventures, a joint venture formed by The R.R. McReynolds Company, majority owner of Wrexham AFC, and the Allyn family of Skaneateles, New York. Red Dragon Ventures was created to drive growth in the Wrexham community and Wrexham AFC.
This transaction represents another landmark deal for the Welsh town and will considerably scale up Wrexham Lager’s infrastructure and international production, distribution, and marketing efforts.
“As co-chairmen of Wrexham AFC we have learned a lot,” said Rob McElhenney and Ryan Reynolds. “The connection between club and community, the intricacies of the offsides rule and the occasional need for beer – especially after finance meetings. Wrexham Lager has a 140-year-old recipe and a storied history and we’re excited to help write its next chapter.”
The Roberts family, who have owned and operated the business since 2011, will maintain an active role within the business, continuing to oversee quality control across all markets, local brewery operations, and community engagement projects.
Recently appointed chief executive James Wright will continue to lead the business after already overseeing rapid UK growth, as well as international expansion into Australia, Japan, and Scandinavia. Distribution in the US and Canada is set to go live in the coming months.
“This is a brand with great heritage – the oldest lager brewery in Great Britain, once enjoyed across the world,” Wright said. “So, to have Rob and Ryan onboard as we embark on international expansion is huge for us. They have been doing wonders for the town of Wrexham and strongly share our passion for once again seeing Wrexham Lager enjoyed in all the far-flung corners of the globe.”
Wrexham Lager Beer Co currently produces the 4% ABV Wrexham Lager, 5% ABV Wrexham Lager Export, and recently introduced 4.6% ABV Pilsener. The 4% Wrexham Lager is produced using an original recipe from 140 years ago that was once available in the world-famous Harrods luxury department store in London, as well as chosen as the only lager to be served on the White Star Line’s Titanic.
Ten global beverage companies have joined forces under a new industry-wide consortium, called REfresh Alliance, which is designed to help accelerate renewable energy adoption across the industry’s supply chain.
The new initiative invites additional companies from across the beverage industry to pool and scale their resources to remove barriers to renewable energy adoption in the supply chain, provide education on best market practices and support the industry’s transition to Net Zero.
Companies currently part of the REfresh Alliance include: Bacardi, Carlsberg Group, Constellation Brands, Diageo, Heineken, Molson Coors Beverage Company, Pernod Ricard, The Coca-Cola Company and Whyte & Mackay.
The programme is managed by leading energy solution provider, Enel X. Through its Advisory Services division, Enel X connects the participants with renewable energy providers and supports renewable energy transactions, aiming to accelerate renewable energy adoption.
The programe also features a dedicated educational platform to help program participants prepare for renewable energy adoption.
Scope 3 emissions, which are not directly produced by a company but from its supply chain, often account for approximately 90 per cent of a beverage company’s carbon footprint. As suppliers continue to face a number of barriers to decarbonisation, REfresh has already engaged with more than 300 suppliers to discuss their involvement in the programme as it aims to support their adoption of renewable energy solutions.
“We have long recognised the need for industry collaboration to deliver the most impact and to accelerate the transition across our supply chains,” Ralf Peters, chief procurement officer of Coca-Cola Europacific Partners (CCEP), and chairman, Coca-Cola Cross Enterprise Procurement Group (CEPG), said.
“I know from my experience across the Coca-Cola system that supporting our supply partners is a key part of our sustainability action – and that encouraging them to transition to renewables is one of the most impactful things we can do to help decarbonise their businesses, and to do the same in ours.”
Hervé Le Faou, chief procurement officer of Heineken, said: “Scope 3 emissions are one of the biggest challenges that the industry faces in delivering on our Net Zero ambitions. We must work together to identify areas of our supply chains where we can pool our resources to accelerate this transition for our suppliers. We look forward to working with other beverage companies to achieve this and accelerate the decarbonization of our industry.”
Jane Liang, chief procurement officer of Diageo, said: “The climate crisis is the most pressing issue of our time and the transition to Net Zero is becoming increasingly important. However, there is only so much we can do as individual businesses. The REfresh Alliance will drive collective action within the industry to accelerate the adoption of renewable energy. We are calling on all companies and suppliers within the industry to join us and support the industry in its transition to Net Zero.”
REfresh intends to initially launch in the mature renewable energy markets of Europe and North America, where it will be able to use existing networks to accelerate impact in support of the industry’s decarbonization efforts. As it continues to grow, the consortium will look to expand to other markets and welcome businesses from across the beverage industry to join it in supporting suppliers in their decarbonization journeys.
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Single-use disposable vapes are displayed for sale on October 27, 2024 in London, England
Vape industry bodies have raised concerns over chancellor Rachel Reeves’ budget announcement introducing a flat-rate excise duty on vaping products, saying it could hurt public health and increase financial pressures on consumers.
The new excise tax, set to begin on October 1, 2026, will add £2.20 per 10ml of vaping liquid, with additional VAT. This rate replaces the previous government’s proposed tiered tax structure, which many in the industry had criticised.
The Independent British Vape Trade Association (IBVTA) welcomed the shift from a tiered structure but voiced strong concerns about the overall impact on vapers, particularly those on lower incomes.
“The government has already proposed regulation that will ban single use products, which despite helping many adult smokers access vaping, have via irresponsible retailers been disproportionately accessible to children,” said IBVTA chair Marcus Saxton.
“It would seem a little questionable then to increase the cost of vaping, especially given there are still around six million adult smokers for who you’re trying to give every opportunity to make the transition to less harmful products.”
Saxton warned that higher costs could hinder the progress made by public services utilising vapes within their smoking cessation services, adding, “The IBVTA do not believe that any excise tax should be applied to products supplied via these services.”
The UK Vaping Industry Association (UKVIA) voiced even sharper criticism, highlighting the potential for the new excise tax to become an economic burden on adult vapers.
John Dunne, UKVIA’s director general, noted that the additional £2.64 per 10ml of e-liquid (inclusive of VAT) could result in a 267 per cent price hike for some e-liquids, a change that he described as “a kick in the teeth for former adult smokers who have switched to vaping to quit their habits.”
Dunne cautioned that the new excise rate would be “the highest in Europe,” and warned that it could deter adult smokers from considering vapes as a smoking cessation tool.
“Some 3 million adults are former smokers thanks to vaping, which is strongly evidenced as the most effective way to quit conventional cigarettes, saving the NHS millions of pounds in treating patients with smoking related conditions. This announcement today deters adult smokers from considering vapes as a method to give up their habits, and hits the lowest paid,” said Dunne.
He criticised the government’s approach, calling it a “revenue grab from former smokers” and noted the inconsistency with reduced VAT rates applied to other nicotine replacement therapies.
“It would also make more sense for vapes to be taxed at a lower VAT rate, which is the case for other nicotine replacement therapies, which have proven to be considerably less successful than vapes in helping smokers quit,” he said.
The budget also announced a consultation on new compliance measures, including vaping duty stamps and supply chain controls to combat illicit production of nicotine products. This consultation, open until December 11, 2024, aims to limit illegal manufacturing while ensuring the new duty’s effective enforcement.