Independents face toughest six months for 30 years, says Nisa chief – Talking Retail

in Industry News 19th January 2023
Independent retailers face a “choppy” six months ahead, says the boss of one of the UK’s largest symbol groups, but the longer-term prospects for the sector are good.
“It will be the most challenged six months of the last 30 years,” said Peter Batt, managing director at wholesaler Nisa. “But our job as leaders is to give hope and support.”
Speaking in a video interview with property agent Christie & Co to mark the launch today of its annual Business Outlook report, Batt added: “It’s all cyclical; I do believe that in 2024 we will be in a much better position, but that doesn’t help people in 2023.
“January and February from a volume point of view will be in some guises scary; people are going to use up their cupboards and people are going to check their spending.
“Things will come right again, but it’s going to be a choppy first six months.”
He was hopeful that the position would improve by the summer as consumers looked to get out and about and spend money again, and more took “staycations” in the UK.
“People are going to keep their money tight, but I believe there’s a lot of positives in the next 12 months.”
One positive for independents and small shopkeepers at the moment was the price of fuel.
Batt said this meant many consumers were doing one big shop each month and then topping up at their local store during the remaining three weeks.
“We see a drop in sales in pay week,” he said.
Shoppers were also buying more ambient, frozen and own-label products in a bid to save money and cut down on food waste.
But Batt believes prices on food and drink will eventually come down, with deflation on many lines, with the probable exception of items such as milk, eggs and bread, where prices have been artificially low for many years.
“The days of four pints of milk for a pound are gone.”
Among the biggest concerns for independents are rising energy costs, Batt added.
“The number one piece of feedback I get from customers – apart from obviously the core ones on price and availability which we will always be challenged on – is how can you help us with energy.”
He said Nisa was working on a plan together with parent company the Co-op to help retailers with their energy planning”, a scheme that would be revealed this month (January).
“Longer-term, we are doing some work with third parties to understand how we can have the most energy-efficient stores in 2030.”
Batt said sustainability would continue to increase in importance, with the focus once again moving onto plastic packaging and food waste remaining high on the agenda, especially for younger shoppers.
“The youngsters of today will ask how sustainable are your products and are you supporting the environment. If you’re not, they will go and shop elsewhere.”
Retailers who have not build that into their business plan for the next five to 10 years, would need to review that, he suggested.
A further big concern for retailer was the deposit return scheme (DRS) on single-use drinks containers. This is due to be introduced in Scotland in August but the other home nations are looking to follow suit soon after.
“DRS worries me,” said Batt. “Customers tell me that if the HFSS [high in fat, salt and sugar] regulations were was confusing, then DRS is at another level.”
His worry was that customers would end up paying 13p to 14p more per bottle or can for something they did not understand.
“Every retailer I speak to is very worried about DRS and the complexity and the cost of it,” Batt said.
A further concern was staff recruitment and retention, he added.
“There needs to be a piece of work in the industry – something I may get involved with in the next three to five years – about making shop work attractive, passionate and something that makes a difference.
“During the pandemic the colleagues got a real lift. People recognised that the shops stayed open and served the community.
“We need to go back to that and take some learnings from how convenience workers were seen.
“If we don’t, then I’m very, very worried about retention and recruiting the next generation.”
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