NEWS
Supermarket price cuts and wage increases making life tougher for indies By Greg Pitcher
Supermarkets are piling pressure on independent retailers by cutting prices and raising wages despite the economic storm. A number of the large chain retailers have announced price cuts or wage increases this year as they battle for market share and positive industrial relations amid the cost-ofliving crisis. This is leaving many fine food purveyors in a difficult position trying to retain and attract customers and staff while costs soar. Daniel Williams, project manager at Godfrey C Williams & Son, said the Cheshire business had noticed a direct impact from a local supermarket. “We advertised for a cheesemonger for our counter and it wasn’t filled because the local Waitrose was also looking for people and paying more,” he said. “Meanwhile they might
The cost-of-living-crisis has prompted supermarkets to cut prices
have offers on products that we can’t compete with.” To allow it to raise wages further, the cheese specialist has tweaked its product range to generate more income. “We have gone into English wine, which gives fewer storage issues than cheese and offers a greater profit margin.” “Our initial strategy was for most of our wines to be in the £15-£25 range,” explained Williams. “But with the cost-of-living
Waitrose adds to delis and boosts support for pig farming Waitrose has added a number of lines to its deli counters, as well as reintroducing its Wine Tasting at Home service and providing a support package to British pig farmers. The upmarket chain has listed lines from British charcuterie producer Capreolus, biscuit-maker The Drinks Bakery and smoked salmon brand Pished Fish. It has also bolstered its own-label offer with new Continental charcuterie products and, according to a report in The Grocer, it will be making physical improvements to a number of its in-store counters. At the end of April, Waitrose announced
the relaunch of its Wine Tasting at Home service, which can now be carried out in-person having been offered virtually over the past two years due to social distancing measures. The retailer also unveiled a support package for its British pig farmers, which could amount to £16m, after pork prices dropped due a fall in exports and an oversupply in the UK market.
crisis we’ve adapted to offer more wine at under £15 with in-store tastings to show their value.” Emma Mosey, co-owner of Yolk Farm & Minskip Farm Shop said the North Yorkshire business has been working hard to find ways to keep employees happy. On top of a “significant” wage increase this year, the retailer has increased the staff discount in its shop and restaurant and organised more team events. Taking a long-term
view remained critical, Mosey said. “In the short term, what the supermarkets are strategising is effective, but if inflation continues to rise, increased costs and wages across the board on businesses of that size are not sustainable.” Andrew Goodacre, chief executive of the British Independent Retailers Association, warned the pressure from supermarkets could intensify. “There is a real danger that large companies will exert even more buying power – whether it is for stock or for labour,” he said. “The cost-of-living crisis is making it harder to retain and recruit people into indie retailing. There is also significant pressure from large companies to keep prices of known-value items low. Once again this will place pressure on the smaller retailer who simply does not have the same power with suppliers.”
Most multiples are adjusting to cost-of-living crsis Asda and Morrisons both lost market share during the first 12 weeks of this year after becoming “progressively less price-competitive” in 2021, according to Dominic Miles, global head of consumer at advisory firm L.E.K. Consulting. Both retailers had since responded with “major initiatives to re-establish their price competitiveness,” he added, while other supermarkets remained “extremely focused on keeping pricing in check”. At the same time, Tesco, Sainsbury’s and Morrisons are among the big names to pledge wages of at least £10 per hour to shop staff – well above legal minimums. German discount chains Lidl and Aldi have also upped pay for staff to more than £10. Iceland is now offering over-60s shoppers money off their groceries every Tuesday. Research by the Office for National Statistics showed householders were thinking more carefully about spending on groceries, said Miles. This could result in fewer trips to independent stores, he warned, “potentially amplified by a heightened perception of [them] being expensive as a result of the major grocer price initiatives”.
WHAT THEY ARE SAYING ABOUT... COUNTERACTING THE SUPERMARKETS DANIEL WILLIAMS, GODFREY C WILLIAMS & SON, CHESHIRE
“I would consider looking at products that provide a worthwhile profit margin and dumping those items that aren’t. We used to have a Chinese and Indian sauce range but if they just sit on the shelves, you have to cut them loose. It comes down to maintaining your unique selling points and adapting what takes priority.” DOMINIC MILES, L.E.K CONSULTING
“The key goal must be to maintain the level of relevance and consumer interest in the store – for example, by emphasising the product quality at a farm shop, or the service level at a high street deli. Alongside this, there may be a need to adjust the range and price architecture to help consumers through the squeeze.” ANDREW GOODACRE, BRITISH INDEPENDENT RETAILERS ASSOCIATION
“Ultimately the smaller retailer will need to continue to focus on local – for people and products. Provenance is still a strong marketing tool, as is sustainability, and I would urge the indie retailer to take a lead in these two areas to compete.”
Vol.23 Issue 5 | June 2022
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