Costs are surging through the roof for retailers this summer, warns CSNA CEO Vincent Jennings
The biggest difficulty for retailers on both sides of the border is the frightening cost of energy, according to Vincent Jennings CEO of CSNA.
“Our bills have just gone through the absolute roof and it’s very worrying because with a product that you’re actually selling, if somebody puts up the price to you, you have the ability to choose to reclaim that by putting up the price. But that doesn’t work with electricity quite as easily because these are hidden additional costs that are not as easy to apportion, even if you are going to do that,” he says.
“But they are very considerable additional business expenses and they’re a real worry to retailers, because the only thing that we can say with certainty is that it is unbelievably uncertain what the future holds for energy prices.
“That is a real concern because we’ve seen a number of players leaving the market. I’ve seen the main players effectively encouraging people once their contracts have finished, they go onto a default price which paradoxically is less expensive than a new contract price would be.
“You just cannot believe how unfamiliar people in business would be with that as a notion that your contract price is going to be more expensive than the off market price. It just doesn’t make sense, but that’s the way it is.”
Costs are seeing phenomenal increases, including the cost of lighting, refrigeration, motive power and regular power, rising by more than 70% in some cases, Mr Jennings says.
“It’s energy costs and just by and large general increases across the board – cost of living increases, cost of doing business increases and the uncertainty that comes with those. They are very very real concerns,” he says.
“These are elements that are outside our control, many of them at least. The Ukrainian crisis is one of the real players in this. It’s not going to get any better and we’re probably at a time where demand is low because it’s summertime.
“People are going to have to forgo secondary and leisure trips, and use the car solely for business purposes, solely for getting to work, and that’s going to be a real concern for our members who have forecourts or who rely upon visitors to the seaside through the summer period – because that’s what brings in the additional money that keeps them going through the year.
“It wouldn’t be a good place to be as a forecourt where you’re not going to be able to get the bounce of people travelling to the seaside or even going for leisure trips and the like, because they just can’t afford to.
“I know of certain sporting organisations who have noted there have been decreases in attendance because people are just not prepared to travel or they can’t afford to travel.
“If you’re looking at putting an extra 20, 30, 40 or 50 euro in the tank to get to work, where is that going to come from on what is pretty much a fixed income for people?”
The energy crisis is affecting retailers in two ways, he says – how the cost of fuel is affecting customers, and how the cost of electricity within stores is affecting the business.
“As to what the government can do on fuel – certainly they can look at reducing excises further, but whether that is an option for a country which has made incredible expenditure in devising a whole range of recent measures for businesses and for citizens to try to be at least somewhat protected from the ravages of Covid …. I don’t know if we can continue to strip the exchequer dry,” Mr Jennings says.
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