Reeves must listen to supermarkets rather than lecture them
Supermarkets begin preparing for Christmas at least six months before the anticipated peak of customer demand hits around December 23. Catering for this entirely predictable surge is in itself an astonishing commercial and logistical feat, but a little over six years ago the UK’s supermarkets were in the midst of an unprecedented challenge.
As pandemic panic gripped the nation, retailers faced successive days of demand that hit or exceeded peak Christmas trading, having had almost no notice. And, despite the occasional shortage of loo roll and pasta, they met this demand.
It was an awesome achievement, demonstrating that this sector operates at the cutting edge of logistics, market forces and technology. We never did bang our pots and pans for them, but we ought to have.
Today, retail remains a highly successful sector of the economy, shaped by intense competition, tight margins and complex supply chains. It’s also an enormous employer and economic contributor, despite the mass of government imposed costs and red tape with which politicians continue to swamp it.
From ‘healthy eating’ regulations that determine what can be discounted and promoted to packaging taxes and expensive environmental schemes imposed in the name of sustainability, armies of people are employed to keep up with new rules, restrictions and requirements. Their energy bills have surged, with M&S boss Stuart Machin pointing out that ‘policy costs’ and government levies “make up over half our bill.”
Reeves want to point to ‘profiteers’
Minimum wage increases, absurd ‘equal pay’ claims and a deluge of new employment law changes are also taking their toll. On top of this, they’re now facing a looming wave of further cost increases from suppliers whose own costs have shot up in response to the Iran war.
Food giant Princes said yesterday that a 5 per cent increase across the board was necessary given the pressures “affecting every stage of our supply chain, from raw material sourcing and manufacturing to packaging and distribution”.
With fertiliser and fuel costs increasing, inflation will hit food – and food retailers – hard in the coming months. Some of these costs will be absorbed – such is the level and effectiveness of competition – but some will inevitably be passed on to consumers.
Later today, the Chancellor will meet the bosses of supermarkets in what many fear is part of ministers’ efforts to appear ‘tough on profiteers.’
Such an accusation does not reflect the facts, and we must hope that the Chancellor uses the meeting not to lecture the people running these incredibly successful and complex businesses, but to listen to them.