The Retailer Spring Edition 2023

THE IMPACT OF THE WAR IN UKRAINE

Helen Dickinson OBE Chief Executive British Retail Consortium

The new year did not exactly bring a new dawn for many retailers. The challenges which kept the industry on its toes last year – from the rising cost of doing business and inflation to the resulting drop off in consumer confidence – have certainly remained over the first few months of this year. And of course, they’ve been joined by a few new friends, with new regulation and border processes for imports coming down the line. Energy prices remain stubbornly high and government support has tapered away. Production and packaging costs have grown across supply chains. Labour market shortages continue to make their presence felt, placing pressure on wages. Expectations were low going into 2023, but things have not turned out quite as badly as many would have predicted. There are reasons to be optimistic. Shop prices may have jumped during 2023, with our BRC-NielsenIQ Shop Price Index for April recording record levels of food inflation. But annual inflation has started to slow: the price of some essentials is beginning to drop; and, with a cut to wholesale food prices, it looks like we may be cresting the hill. Looking at other key retail metrics, there are more glimmers of positivity to be aware of. In March, total footfall increased by almost 7%. Although still below pre-pandemic levels, there are signs of a return to established consumer habits like the weekend shopping trip. And although shop vacancies have not yet climbed back to where they were in 2019, they do appear to have stabi lised in the first quarter of 2023, with improvements across shopping centres and retail parks. Consumer confidence appears to be on the rebound, too. According to GfK, there was improvement in all tracked measures, with overall confidence up six points in April compared to March. Though still sitting at -30, consumer confidence is now higher than at any time in the last 12 months. We’ll all be hoping that this momentum is maintained, and with summer and a range of events from the King’s Coronation to Eurovision taking place, there is certainly plenty to be hopeful about. There’s also plenty to be aware of and plenty to be preparing for. As retailers, you’re all in the business of selling goods. And those goods tend to come in packaging, which needs to be managed and recycled after its disposed of. This of course has a cost attached. But that cost is going to rise – considerably – under new government regulations known as Packaging Extended Producer Responsibility (EPR). A recent member survey found that 95% of you aren’t confident or ready for EPR and now is absolutely the time to start getting up to speed.EPR will mean that businesses pay the full costs of managing and recycling their packaging material which ends up in household and street bins, or is littered. Your packaging recycling costs could rise by up to ten times what they currently are and there are new obligations to report data on your packaging twice a year from this October. We know that the data reporting element will be challenging and time-consuming but it’s vital that you start looking at this now, not least as your data will inform the fees you pay under EPR. One positive to note is that from 2025, packaging which is easier to recycle will attract lower fees. There’ll also be changes to recycling labelling. By March 2026, all consumer-facing and shipment packaging will need to be labelled as ‘Recycle’ or ‘Do Not Recycle’ and have a specific logo, although this won’t be required on plastic films and flexible packaging until March 2027. I mentioned that new checks on goods imports will be introduced this year. From October, the Border Target Operating Model comes into effect, bringing with it new checks on food products. We’re working with government to ensure that they are engaging with you and overseas suppliers in preparation. The Windsor Framework, which applies to movements between GB and Northern Ireland, also starts from October and we’re engaging with government to feedback your views. And although 2024 may still seem an aeon away, we’ve already begun our engagement with the main political parties ahead of the upcoming General Election – likely to take place next autumn. We’ve been working with Labour and the Conservatives to set up member meetings with key figures in the parties’ apparatus (keep an eye out for more details) and starting to develop our manifesto for the industry. So, there’s lots going on to keep me (and I’m sure all of you) busy in the months ahead. Remember, the BRC team is here to help so do reach out if you need a hand.

‘‘

Consumer confi dence appears to be on the rebound, too. According to GfK, there was improvement in all tracked measures, with overall confi dence up six points in April compared to March.”