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NEWS SPECIAL
betterRetailing.com // 4 March 2022 RN
How to survive the energy crisis As rising energy bills are set to severely impact the running costs of stores, retailers tell RN how their tariff is changing, and discuss their plans to cut costs and increase sales to protect the profitability of their stores
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tores must make ‘fundamental’ changes to their business models to survive the energy crisis, with the average independent store needing to find nearly £15,000 in extra annual gross profit or savings to offset its impact. The crisis in Ukraine has escalated the risk for retailers coming to the end of their energy contracts. Energy broker Neil King, of Wiser Utilities, explained: “Many retailers hedged their bets that prices would go down in April, often taking out expensive bridging tariffs. Their gamble has not paid off and the rates are climbing. The day before the invasion, prices were as low as 20p per kWh night rate and 26p for day rate. Now, it’s 28p and 35p respectively. This isn’t going to be something stores can wait out.”
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Retailers with long memories remembered the last energy spike in 1973. betterRetailing associate editor Steve Denham was working for WHSmith at the time. He told RN: “Store managers had an energy budget, and when it was gone, it was gone. It meant switching off was the only way to manage. That meant taking lightbulbs out and cutting off air conditioning and heating. The staff room was the only place heated in the winter, and coats on the shopfloor coupled with a hot drink was the only way to manage.” Ballymena shop owner Eugene Diamond added: “Even during the 1970s, when we had lots of trouble in Northern Ireland, we never saw anything like this.” A survey of more than 10 store owners to have changed energy
Their gamble has not paid off and the rates are climbing
tariff in the past six months reveals the scale of the problem. The average store’s bill increased by 128% from £964 per month to £2,201. With ACS suggesting an average store margin of 22%, this equates to having to find an extra £1,298 in weekly sales just to stand still. The figures do not include the impact of April’s upcoming wage and National Insurance rises. FIGHTING BACK AGAINST THE ENERGY SQUEEZE Energy-saving measures, such as LED lighting and retrofitting doors on chillers, were the main actions being touted by store owners surveyed. For instance, Diamond said: “Last year, I installed LED lighting, and I can’t recommend this enough to other retailers. My usage has dropped by 20% every quarter.”
01/03/2022 15:41
