The fact is that a little inflation is a good thing.
The latest inflation rate is at only 1%.
When it was in focus, the Bank of England was charged with keeping inflation to a target of 2%.
So let's not get carried away. A small increase in prices shows that the economy is growing, it shows that people are spending and it shows signs of life. There may be higher inflation figures on the way as the weakness of the pound makes imports more expensive but we can focus our spending on cheaper UK products if this becomes a long-term trend.
For retailers little has changed. The deals to buy imports will have been struck some time ago so the recent falls in the value of the pound against the Euro and the Dollar in particular are based on commitments already made. The decisions now are to pass on price rise to customers or to look elsewhere for similar products. The very public falling out between Tesco and Unilever is a case in point. The challenge is to make the decisions that are right for the customer, and then these will inevitably be those decisions that are right for the company.
Your own retailer
If you are an independent retailer, as I know many of my readers are, then you have some decisions to make, especially if you import goods from parts of the world where the pound is weak. You have to try to change your strategy a little in order to do the right thing for your customers. Do you-
- Try to renegotiate a better price with your suppliers?
- Swallow the price increases and take a hit on your profits?
- Pass the extra costs on to your customers?
- Look to source your products in the UK?
There will always be challenges in business, so these decisions should be part of your normal review process already. You should have a schedule of once a month or once a quarter set out to look at the aspects of your business that can be altered to make or save you money. Being in business for yourself is all about rolling with the punches and making the decisions that will bring you success.
The situation you find yourself in now needs special attention and can't wait until the next quarter but that doesn't mean it is an impossible bridge to span. Take a look at the options above and decide which one (or which combination of more than one) will be best for you.
We all have strong feelings about the Brexit result but that does not means that we have to develop a blame culture. Let's make the decisions that allow us and our customers to get on. A little inflation won't change the world!