Will rising costs push consumers towards independent retail?

14 April 2022, 08:29 AM
  • Rising fuel, food and energy costs are disrupting the entire country, leading to another big squeeze. Will this help or hinder indies?
Will rising costs push consumers towards independent retail?

The majority of the public is struggling to make ends meet as we dive into spring, but Martin McTague, national chair of the FSB is especially concerned for independent retail. “Small businesses are really feeling the pinch at the moment, with spiralling energy bills, staff shortages and a recent hike in National Insurance costs. The slowing of economic growth is also ramping up the pressure, as the cost-of-living crisis takes hold of consumers’ budgets.”

But experts believe the current crisis will change consumer behaviour in the long-term, and push shoppers to embrace localism.

Fewer shopping trips
Rising fuel prices are set to affect everyone in the food supply chain, but when it comes to consumers, experts are predicting there will be a reduction in the number of trips shoppers make in an effort to save money. 

As Martin puts it, “Even those businesses that don’t directly use a vehicle are impacted by increasing fuel costs, as delivery costs increase, or customers cut down on visits to their premises to save fuel.” 

However, Andrew Goodacre, CEO of Bira suggested this could tempt shoppers to go local. “There is no doubt that people will think about their car journeys and use of fuel. With this in mind there is a stronger possibility of people shopping more locally – probably doing a little shopping, but more often.”

Mark Kacary, managing director at the Norfolk Deli expanded on this, adding: “It will all depend on where people live, and their proximity to their usual shopping habits. In fact, I was speaking to a customer this morning about how some people look at the price of something in an independent, feel that they could make a 50p saving by getting in their car and driving elsewhere without a thought for the cost of the fuel, wear and tear, not to mention the additional time it takes to make a tiny saving.

“If the rising fuel costs makes people think twice about the value of their trip and whether it will cost them more to travel than it will be to shop locally then that could signal a longer-term trend as it’s unlikely that fuel/travel costs will come down dramatically any time soon.”

An online shopping revival?
At the height of the pandemic, delivery and click & collect services increased significantly, and with many professionals continuing to work from home, they might be less likely to make car journeys. Andrew explained: “The latest official stats show that online sales have reduced again in March, although still at higher levels than before Covid. 

“If shoppers do not want to use fuel to do shopping, then online is an obvious option for them and this would be detrimental to most indie retailers. However, I believe that those people who are visiting shops (and we should remember that footfall has never recovered to 2019 levels) are enjoying the opportunity to be out and about, with public transport still a viable option to access the high streets.”

“It has to be remembered that even online shopping won’t be as cheap as it was during the pandemic. Fuel costs are affecting online as are the price rises we’re all facing”, Mark added. While we could see a localism revolution, this doesn’t mean that indie retailers shouldn’t worry about an online shopping resurgence

As Mark explains, “Online shopping might increase, but then again if there were to be a resurgence in shopping locally possibly not. Either way, the warning signs were clear to see during the pandemic, if people stay at home more, they will shop online more. If an independent retailer hasn’t invested or taken the opportunity to enhance their online presence to enable online shopping then they can’t say there wasn’t a significant event to give them sufficient warning.”

A reduction in eating out
Research from commerce software business Braze states that inflation is motivating 82% of UK consumers to cut back on non-essentials, with three in five of the 2,000 Brits surveyed saying they would be reducing spending on takeaways.

With consumers less likely to eat out due to fuel prices and unnecessary spending, could this mean a resurgence of cooking from scratch and premium ready meals that give the illusion of restaurant quality?

Andrew certainly thinks so, as he shared his thoughts with Speciality Food: “During the pandemic, we saw a resurgence in home baking. We also know that savings accounts have more money in them than usual and I believe that if people decide to cook at home, they will want to treat themselves by using more diverse and better-quality ingredients. 

“I think local food retailers should focus on marketing ideas such as recipe/menu plans, using their products and ingredients to help consumers make the choice and take away some of the ‘fear’ of cooking a more complex meal. Whilst many customers will want value when shopping, I also believe that many will also look to trade up for a better experience, and this is where local speciality retailers have an opportunity.”

However, Mark argued this may not be feasible for all fine food retailers, “I feel this depends on the retailer. Local retailers (if they have a kitchen) could look at creating their own healthier, less processed food options. They can use social media/blogs to promote the use of fresh ingredients through the publishing of recipes that would promote ingredients available on their premises. But some small retailers will have a greater range of options and ideas available for their customer base than others.”

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