Big box retailers resist price increases as Brexit effect bites

Unilever's spat with Tesco highlights supply chain pressures.

Garden centres: product prices experienced sudden hike as sterling's value fell in wake of Brexit
Garden centres: product prices experienced sudden hike as sterling's value fell in wake of Brexit

Following Unilever's falling out with Tesco over a 10 per cent wholesale price increase demand, sources suggest that big box retailers in the garden industry are resisting price increases caused by Brexit and subsequent exchange rate fluctuations, and are changing garden product suppliers to get better deals.

Tesco refused to accept a 10 per cent hike in the price of Unilever products such as Marmite caused by the post-23 June referendum crash in the value of sterling, which means products priced in euros and dollars have become more expensive.

At least one big UK garden industry supplier is believed to have "walked away" from a major retailer after it refused to compromise on price increases.

Tillington buyer and Alton Garden Centre director Andy Bunker said: "A lot of people are coming out putting prices up. Cadix is up 10 per cent. Plant people are talking 10 per cent. I'm hoping by Christmas (sterling) will have realigned. It's gone from EUR1.30 to EUR1.10 but I hope it will creep up. But prices have got to go up. If it was EUR1.30 and now it's EUR1.10, then something has got to give."

He added that most products have some overseas elements so they will be affected. However, he said an 18-20 per cent "knee-jerk" price rise is "too much" and said an initial 10 per cent rise before another look in spring is what many suppliers are doing. Brexit "couldn't have happened at a better time" between gardening seasons, he added.

Beckworth Emporium owner Jon Kitching said: "Retailers are going to have to accept that they will have to pay more. Regardless of what they say, in time prices will go up. They are kidding themselves if they think suppliers will drop margins by 10 per cent. You're not going to as a retailer, so why should the supplier? But who knows? It may settle down." All-Party Parliamentary Horticulture & Gardening Group chairman Ian Liddell-Grainger MP said he would "name and shame" in the House of Commons suppliers that "bully" retailers.

Scotts Miracle-Gro sends UK-made lawn fertiliser overseas but imports from France - Tomorite is made in its factories there. Speaking at the recent HTA Garden Futures event, Scotts general manager Sheila Hill said retailers and suppliers need to share price rises caused by hikes within the supply chain. "The biggest issue of Brexit is the cost of raw materials and packaging. If we can't absorb costs, what do we do about price increases? Retailers and manufacturers need to share them."

She said the regulatory changes caused by Brexit are still up in the air and Scotts' previous zonal registrations of actives probably would no longer apply. There will be "more cost and uncertainty" caused by the new post-EU regulatory system, she added.

HTA chief executive Carol Paris said at the event: "Exchange rates are the immediate concern. Many businesses have forward bought, but come next season I think there will be price changes across the board."

Ferndale Garden Centre director Neil Grant said: "We will have to accept (price rises). We always have. We're flexible. I'm not worried." But he said "accepted price" products such as Miracle-Gro are "going to be an issue", though "we are underselling plants".

Planner/retailer Malcolm Scott said: "Garden centres are different to supermarkets because they don't have the monopoly like Tesco to face up to the suppliers. Also, they're not a weekly shop and people are not as aware of prices to the same extent. Everyone knows the price of a pint of milk, but not many know weedkiller or slug pellets. Hopefully, there will be more plants from the UK so they shouldn't go up. If it stays the same, this should encourage young plant growers in the UK."

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Neville Stein

Business advice from Neville Stein, MD of business consultancy Ovation

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