As businesses wait for Rishi Sunak-led government’s first Spring statement, vehement calls are being raised to restore high streets, ease running costs, boost consumer confidence and create a business-friendly environment in the country.
On March 15, Chancellor of the Exchequer Jeremy Hunt will deliver his first Spring Budget. Insiders claim that Hunt has warned not to expect any major tax cuts in his March Budget. In a recent public interview, he also insisted the "best tax cut right now is a cut in inflation", arguing that reducing inflation was the "only sustainable way to restore industrial harmony" in Britain.
Sunak too, though has stressed his desire to cut taxes earlier, has warned voters they would have to wait due to after effects ofCovid-19 crisis and Russia’s current invasion of Ukraine.
As cost-of-living crisis continues to squeeze shoppers’ spending, retailers are also facing a series of other problems like high energy costs, fluctuating supply on some lines, hikes of food prices, squeeze of margin and staff shortage. Not to forget the lower footfalls in general.
No wonder, retailers have been keeping their wish list ready ahead of the Hunt’s budget announcement. The intention is to boost spend, restore consumer confidence, bring back footfall and ease costs of running business.
Bring back VAT-free shopping
World famous British fashion brand Mulberry recently announced the closure of its Bond Street, London store, saying high-end retail in London was becoming “unviable” after demise of VAT-free shopping.
Known as Tax Free for Tourists, the £1.3 billion scheme was part of the short-lived mini-Budget drawn by Liz Truss’s government during its turbulent 49 days in Downing Street.
When Hunt took over the reins, he reversed the decision as part of wider measures designed to soothe fears on international financial markets about the UK’s economy. He is due to outline his next set of tax in March and is rumored to bring back return of the rebate.
The move does not much affect grocery retail directly but it does impact overall footfall and general sentiment in high streets.
BIRA CEO Andrew Goodacre
BIRA CEO Andrew Goodacre calls the decision to remove the VAT exemption for visitors as “completely flawed”.
“I think we are no longer competitive as a tourist destination compared to others places in Europe. Visitors know they can buy the same product, possibly in Paris or Milan or anywhere else in Europeway cheaper,” Goodacre tells Asian Trader.
British Retail Consortium (BRC) is also calling to reconsider VAT exemptions.
Helen Dickinson OBE, chief executive of BRC, states that offering tax-free shopping for tourists would help strengthen the UK’s position as a top destination for international shoppers.
“As it stands, the UK is one of the only European countries not to provide a tax-free shopping scheme to encourage tourism, which is why we’re asking the government to look again at reinstating it,” Dickinson tells Asian Trader.
Business Rates
Although business rate bills are set to drop by a fifth in April, retailers want further overhaul reform of current “broken” system.
Shops will see a 20 per cent reduction in business rates bills from April according to the government's £13.6 billion support package announced in Hunt's autumn statement.
Business rate is linked to the underlying value of a property, but they are currently based on values from April 2015. Retailers have long argued that it does not reflect how real estate values in the industry have been hammered due to the pandemic and competition from online firms.
Concerning the issues, Dickinson from BRC stated that the government took an essential step towards longer term reform of the “broken Business Rates system” by the scrapping of downwards phasing of transitional relief.
“Finally, retailers are paying only what they owe, rather than overpaying their rates bill even when the value of their property had already fallen. Yet the need for Business Rates reform is far from over, and the changes made in the budget are a far cry from the fundamental reform promised in 2019,” Dickinson tells Asian Trader.
“The ‘broken’ Business Rates system is a drag on investment, jobs, and the vibrancy of town and city centres. For example, while other business taxes like Corporation Tax and VAT rise and fall with the changes in the economy, Business Rates must be paid in full whether firms are making a profit or a loss.
Helen Dickinson, Chief Executive of the British Retail Consortium
“This makes Business Rates a final nail in the coffin of many struggling stores- shutting shops, costing jobs and preventing new openings,” she says.
Stating how businesses are “rethinking their strategy”, Goodacre from BIRA is also reminding government to recognise that high streets are in a very “fragile” position due to low consumer spending.
“There's real concern for some clear program for economic growth and retailers are concerned about their future. I think this spring statement is an opportunity to start delivering what the government is going to do about stimulating growth in the economy.”
BIRA echoed BRC’s call to state that business rates still need wholesale reform, especially given that for smaller retailers, the rate able values are set to increase by 10 per cent.
“We welcome the higher level of retail discount that will come into force in April, but we also want to see the multiplier permanently reduced for the small retailers to further offset the increase in rate able values,” Goodacre said.
The Federation of Small Businesses (FSB) wants the Small Business Rates Relief (SBRR) threshold raised to £25,000 (it is currently £15,000), while introducing a new “large business multiplier” for properties with a rateable value above £500,000. This move would not cost the government anything, as said by FSB at the beginning of February.
Wages and staff shortage
Labour shortage is a persistent problem now which impacts grocery sector at multiple levels.
To tackle the same, British Chamber of Commerce is calling on to reform the Shortage Occupation List to help firms fill urgent job vacancies from outside the UK when they cannot recruit locally.
There is also buzz that the government is considering extending the working hours limits for foreign students studying in the UK. An expansion of free childcare could also be announced to help parents get back into work.
Retail trade union Usdaw in its formal representation to HM Treasury has asked for a new deal for retail workers with an immediate £12 per hour minimum wage along with an end to one-sided flexibility, ban on zero and short hour’s contracts to provide much needed security of employment and income.
iStock image
Usdaw is also calling for a fundamental overhaul of the Universal Credit system to support the incomes of working people and reform in childcare policies.
FSB is also demanding to bring in a measure to increase employers’ Employment Allowance in line with the National Living Wage, increase tax-free childcare to £3,000 and more help for over 50s employment.
FSB Policy Chair Tina McKenzie said that there is an urgent need of a strong agenda for growth.
“Hopefully, there is a recognition in government that too many initiatives of the past have ignored the small businesses that make up such a large chunk of UK firms, and that we need to focus on small firms when making economic policy,” McKenzie said.
Overall, FSB is calling on the Chancellor to bring forward bold measures to create a budget that drives economic growth and fosters a business-friendly environment.
Energy Bill Relief
From April retailers will be at even greater disadvantage as the government’s support to businesses to cope with the jump in energy bills is set to be slashed significantly, raising energy costs for small businesses by around 80 per cent.
Whilst wholesale energy prices have fallen, the cost to businesses remain very high and the energy support for indie retailers will fall from £6,400 per annum to £400 per annum (based on government figures).
Goodacre points out that with energy companies making record profits, the windfall tax received by the government will be higher than expected, and should allow the government to do more to support businesses. This support could be in the form of grants to improve the energy efficient of the business.
“BIRA would also like to see those business who signed contracts when prices were at their highest last year, be allowed to renegotiate so they can benefit from lower wholesale prices The government should also commit to reviewing the energy support scheme again in October when costs normally increase,” he said.
Business groups including the Association of Convenience Stores (ACS), FSB, and BIRA have written to the Business Secretary, calling on him to rethink plans to slash the support provided to shops and other local businesses amid fears of widespread closures in the summer.
Strongly condemning the government over its failure to help businesses, ACS chief James Lowman has warned that without urgent intervention to allow businesses to renegotiate fairer contracts, local shops will be forced to shut down.
Photo: iStock
ACS has been demanding more support for rural areas as part of the government’s ongoing leveling up agenda, particularly as supporting investment in digital infrastructure to provide rural shops with reliable broadband and mobile coverage, and enabling rural shops to maintain a viable network of free to use cash machines.
In light of slashing subsidies, trade bodies like FSB also want government to provide “Green” vouchers to small businesses to help them invest in environment-friendly sustainable improvements in their premises, including heat pumps, better insulation and solar panels. To implement the same, FSB has proposed a “Help to Green” voucher worth £5,000 with renovations.
What’s Ahead
Overall, small local retailers are worried over the sustainability of their businesses.
As Goodacre points out, consumer habits have changed post-pandemic and footfall will never be the same again. However, small changes, like providing better accessibility for all age groups, parking spots, can go a long way in welcoming shoppers back to high streets.
“Stimulation of economy, increase in consumer confidence, investment in high streets and better support system is what retailers are seeking at the moment,” he concluded.
The last two years have been marked by a period of rapidly rising inflation, majorly driven by energy and food prices. Despite the need and expectations, it is being said that Hunt will be able to offer only modest help in the upcoming budget and no immediate major relief because of tight constraints on the public finances.
It all implies that from April 2023, businesses will be facing highest tax burden since Second World War. The picture will become clearer when Hunt will present his “make or break” budget on March 15.
Scottish business conglomerate Glenshire Group has hired Daniel Arrandale as its new Property Director.
Starting in the newly created role last week, Arrandale brings a wealth of industry experience to the business, including his most recent position as Acquisitions Manager for Asda and his previous position as Development Manager at EG Group.
“I am thrilled to be joining Glenshire Group in a period of tremendous growth, with many exciting opportunities on the horizon,” said Arrandale. “I’m looking forward to working with the existing development team to maximise the opportunities within our current estate, whilst also growing the business further with the acquisition of new sites.”
As part of Arrandale’s remit, he will oversee acquisitions, development, and growth for Greens Retail, Pizza Hut, and wider Glenshire Group property development and investment interests.
The bulk of Arrandale’s career has been as Retail Director at commercial agents Christie & Co, focussing on the convenience, forecourt and franchise markets. Arrandale served at Christie & Co. for 23 years.
Harris Aslam, Managing Director at Glenshire Group added: “We are very excited to welcome Dan into the Glenshire family. Having worked with Dan many times over the years on several transactions, I can confidently say his breadth of knowledge and experience in this sector will give us a huge advantage as we continue to expand our portfolio.”
Currently operating 27 convenience stores and 20 Pizza Hut franchises in Scotland, Glenshire Group has committed to significantly furthering new location openings in Scotland as well as bolstering their property portfolio.
Brewer Carlsberg is shifting some of its marketing focus to cheaper brands, it said on Thursday (31), as consumers in major markets bought cheaper beer and in reduced quantities.
The maker of Kronenbourg 1664, Tuborg and Somersby said beer sales volumes fell by 1.3 per cent in the third quarter, noting declines in China, France and the United Kingdom. Premium sales fell 0.5 per cent in the quarter."In Western Europe, there's no doubt that the average consumer is holding back," CEO Jacob Aarup-Andersen told Reuters.
"In Asia, China stands out as a market where the consumer is very weak. Most other Asian markets are actually okay," he said, adding the company had not yet seen Chinese stimulus measures having any impact on consumer behaviour.For years, brewers have relied on a strategy of developing and promoting their more expensive premium brands to offset an overall decline in drinking.
Aarup-Andersen said he remained confident in the long-term growth potential of premium beer and that the category will comprise a significantly larger portion of Carlsberg's business in a decade.For now, however, the company is adjusting its marketing.
"In markets where we are seeing a significant pressure on premium, we are reallocating some of our focus into making sure that we are promoting properly around the right mainstream brands," he said.
The world's third-largest brewer behind Anheuser-Busch Inbev and Heineken said third-quarter sales rose 1 per cent to 20.5 billion Danish crowns ($2.98 billion), compared with 20.7 billion expected on average by analysts in a poll gathered by the company.
Despite the shift in consumer behaviour, Carlsberg said it still expects full-year organic operating profit growth to be between 4 per cent and 6 per cent. The company lifted its full-year guidance in August.
Also on Thursday (31), the world's largest beer maker Anheuser-Busch InBev reported third-quarter profits, revenues and volumes behind forecasts. AB InBev's third-quarter statement highlighted stronger growth for its more expensive beers, like Corona, which grew 10.2% outside of its home market, Mexico, during the period.
Consumers now want a greater commitment from retailers in cutting food waste, refilling stations, sustainable packaging, and partnering with social purpose organisations, states a recent research, which also highlights that a good majority (69 per cent) of younger consumers are more likely to shop with what they see as socially responsible retailers though price sensitivity still plays a crucial role.
According to the findings, published in Vypr’s Consumer Horizon Report, reducing food waste is the most important factor for the majority of UK consumers (29 per cent), especially for Gen Z women aged 18-24 (38 per cent). More than a third (37 per cent) of men aged 18-24 said they needed food storage advice. A similar number of women aged 18-24 (33 per cent) want meal kits with the exact amount of ingredients included for them to cut down on food waste.
Refill stations for personal care, cleaning products, dry goods, and beverages are also in high demand. Consumers, particularly Gen Z women, are keen to use these stations, provided they offer a cost-saving of 6-10 per cent compared to packaged goods. The study indicates that older shoppers are less likely to use refill stations unless prices are reduced by 15 per cent or more, which Vypr said shows the importance of price in driving consumers to adopt sustainable shopping habits.
The third priority for brands and retailers is to adopt sustainable packaging. Awareness of eco-friendly packaging is high, especially among younger generations. Two-thirds of UK consumers say they expect to pay more for sustainably packaged products, and that figure rises to 86 per cent among Gen Z and Millennials. However, Vypr’s research suggests that while shoppers express willingness to pay more, price sensitivity still plays a crucial role.
Ben Davis, founder of Vypr, said: “There’s often a disconnect between consumer intentions and actions. Brands need to understand that simply offering sustainable options may not be enough if price points don’t match consumer expectations.
“For Gen Z and Millennials, sustainable products need to be competitively priced or risk losing long-term loyalty. We tested this by presenting products with and without the label ‘100 per cent Recycled Packaging’ and found price remained the key purchase decision-making factor for most consumers.”
Another factor in building loyalty among younger consumers is to showcase social responsibility. The research reveals that 60% of shoppers are more likely to shop at retailers that partner with food rescue organisations or promote a charitable cause. Among Gen Z and Millennials, this figure jumps to 69%, showing a strong preference for brands that demonstrate a social purpose.
The report also reveals that 85% of shoppers are willing to pay a deposit for reusable products, though it is younger consumers, particularly those aged 18-24 who express the strongest support for such initiatives.
The Consumer Horizon report which provides insights shaping retail, product innovation, and consumer behaviour going into 2025, can be seen here.
Sugro UK, the number one buying and marketing buying group*, in partnership with b2b.store, is thrilled to announce a further expansion of its existing E-Loyalty scheme programme, which has proven to be very popular with its members and retailers, by introducing E-Loyalty Extra Compliance and Execution scheme as well as E-Coupons.
The E-Loyalty Extra is aimed to boost compliance and execution at retail store level to drive new product launches, core range compliance, some exciting fixture trials with its supply partners and more! It will be available to all member owned and member affiliated retail stores within the group.
The E-Loyalty Extra loyalty scheme will be accessible by retailers via WhatsApp platform and will allow retailers to capture evidence of compliance by simply clicking “take photo” button.
With the addition of another digital enhancement introduced to the group recently – Coupon - based loyalty mechanic, members are now empowered to incentivise and reward customers, driving stronger consumer connections and fostering brand loyalty at a granular level. Retailers can now simply redeem a coupon at the point of check out. Another key digital development within the group is WhatsApp E-Presell which enables Sugro UK’s retail partners to provide advance product volume commitments for new product launches. This functionality is particularly powerful as it ensures that suppliers have accurate forecasts before product launches, enabling better stock availability from day one of product being available on the market.
The ease and speed of using WhatsApp for these commitments simplifies the presell process, ensures accuracy and strengthens relationships across the supply chain.
While other industry players may soon consider introducing similar digital tools, Sugro UK are proud to be at the forefront of enhancing retail-focused digital solutions. This early adoption not only ensures that Sugro UK members remain competitive but also guarantees them access to the best digital tools available in the market. These efforts are part of Sugro UK's ongoing commitment to delivering value to its members and empowering them with innovative solutions for growth and success in an increasingly digital retail environment.
Sugro Head of Commercial and Marketing, Yulia Petitt said: “I am delighted that Sugro UK members are now able to provide photographic evidence of retail compliance and in-store execution to our supplier partners, using a wide range of display and compliance criteria such as planograms, secondary displays, trials, and new product developments (NPDs).These digital features allow members to share real-time proof of execution, enhancing accountability and building supplier confidence. The launch of E-Presell functionality opens a huge digital advantage for the group which will benefit all – members, retailers and suppliers in gaining accurate forecast and ensuring product visibility in store from day one of product being on the market and with the ease of using WhatsApp, the entire pre-sell process becomes a much quicker and easier process to manage for all parties.
"The Group has had 18 consecutive years of growth and, once again, on track to deliver in 2024, with the year-to-date performance of +15% year on year and growth across all categories.” Rob Mannion, CEO of b2b.store, added: “The rate of innovation in the wholesale sector is increasing and these launches are further great examples of that. We’re particularly excited about the developments and different uses of WhatsApp in the industry, with more coming in the pipeline for 2025 – it’s a tool no wholesaler or buying group can afford to ignore because of the level of influence it’s having in the sector and there’s no sign of that direction of travel changing any time soon.”
Sugro UK is proudly owned by its 90 plus independent wholesale members, with a combined turnover of over £2.5 billion.
Expanding its footprint in the World Foods category, Paulig has acquired Panesar Foods, a prominent UK-based producer of sauces and condiments.
Founded in 1992 and headquartered in Tipton, Panesar Foods is a family-owned business with three production facilities, employing 308 staff and achieving a turnover of £59 million in the 2023 fiscal year.
This collaboration is expected to accelerate product launches and drive growth in diverse offerings, including sauces, salsas, marinades, dips, and condiments.
"We have collaborated with Panesar Foods for 17 years, and we are very pleased to welcome the company to Paulig," said Rolf Ladau, CEO of Paulig. "Today, our combined taste expertise and innovation skills unite around a shared ambition: to accelerate our international growth and expand our World Foods offerings."
Bill Panesar, CEO of Panesar Foods, expressed confidence in the partnership, stating, “As Panesar Foods becomes part of Paulig, I am confident that our ambitions for international growth will be realised, and the business will continue to thrive. We share a strong commitment to innovation and delivering high-quality, flavourful products, and I look forward to bringing even more delicious products to the market, together."
Jas Panesar, MD of Panesar Foods, echoed, “This partnership will allow us to reach new markets and deliver our authentic World Food flavors to a broader audience. We look forward to combining our passion for quality food with Paulig’s commitment to sustainability and innovation.”
All 308 Panesar employees will transition to Paulig’s team. Financial details of the transaction remain undisclosed.