This week, the UK’s new PM Liz Truss announced her energy relief package to help with the current cost of living crisis and the soaring electricity and gas prices. Central to this package is the energy price guarantee. Taking effect from 1 October, energy bills will be capped at £2,500 for the next two years for households and businesses alike. A promise of some relief is better than no relief but there is a disappointing lack of any detail in Liz Truss’ announcement.
A business energy price guarantee on its own won’t be enough to save the UK’s retail sector and its supply and logistics network in the run-up to peak season. Businesses need more support, faster, to avoid catastrophic consequences this winter. According to the insolvency firm Red Flag, more than 75,000 larger firms that are high energy users are at risk of insolvency or are likely to lay off staff without urgent government support.
An energy relief package may help with the cost of running electric delivery fleets and keeping the lights on, but it will not help with vehicle fuel costs, wage inflation, and the national shortage of labour in UK retail and supply chains as a result of Brexit and Covid. Retail businesses are being squeezed from every possible side, just as a recovery from Covid lockdowns was on the horizon.
Without a wider government support package, balancing the books in a sector driven by cost and service is an impossible task. Brands can only absorb so many costs before passing them onto consumers, or they face the risk of going out of business. The sector needs immediate fuel duty tax breaks and help to get young people into work across the country. How else will businesses cope with peak season?
As consumer expectations remain high, supply chain delays and industrial action that impacts last-mile delivery logistics affect the customer experience and erodes hard-earned loyalties. Retailers and their fleets need absolute transparency of where every penny goes so that they can get smarter about what’s working and how to become more cost-efficient. New and upcoming technologies, such as artificial intelligence and machine learning, should be used to improve competitive advantage and find efficiencies by analysing previous performance.
Now is the time to get the business supply and logistics chain the fittest it’s ever been. To ensure competitive advantage, UK businesses need to scrutinise where every penny is spent so they can quickly identify cost efficiencies. There are hard decisions to be made as consumers seek better value for their shrinking disposable income, but those brands that get it right will weather the storm.
Danny Hudson, director of UK & Europe, FarEye
