6th January 2020
The challenges for 2020
Step out into the high street at the start of 2020 and almost every shop front is emblazoned with sale details offering consumers ever more tempting discounts. But contrast this with the growing number of high streets where empty shop fronts and ‘to let’ signs are increasingly becoming the norm, and this might suggest that the continuous use of sales and price promotion is not a route to salvation.
From time to time we need to pause and reflect on how this relentless driving down of price is achieved. The margins for many commodity food suppliers are notoriously slim and yet year after year production costs continue to rise. The recent increase in the minimum wage is a good case in point. In their manifesto the Conservatives pledged to address the problem of low wages. No one would argue against the opportunity to earn enough to afford a decent standard of living. In April the living wage increases by 6.2%. For many fresh produces businesses where employment costs represent 30% or more of total production costs, finding this extra cash represents a big challenge.
One of the serious shortcomings of our current political system – and not just here in the UK, is the increasing trend of not explaining that for every upside there is usually a downside. Spending commitments must be paid for either through higher taxation or in the case of businesses through the increased costs of goods. Yes, improvements in productivity and efficiency have a part to play in mitigating increased costs, but that argument cannot be applied all the time