Delegates hear call for collaboration in face of Brexit challenges

Greater collaboration between suppliers and retailers, with the "pain" of inflationary pressures shared between all parties, is likely to offer the best defence against the potential impact of Brexit, a panel session at the Garden Retail Summit heard.

Garden Retail Summit 2017:  Andy Saunders, Martin Breddy, Alan Roper, Andy Bunker and Clive Daley debate Brexit
Garden Retail Summit 2017: Andy Saunders, Martin Breddy, Alan Roper, Andy Bunker and Clive Daley debate Brexit

Management Today deputy editor Andy Saunders who chaired a panel looking at how the garden retail industry could prepare for Brexit from pricing strategies to the impact of inflation on consumer confidence, said "gloomy" predictions after the Brexit vote on 23 June "have not come true" as there has been a mini boom in the economy subsequently.  However, "there are no experts" in this "year of uncertainty", he added.

Squires managing director Martin Breddy said: "You've got to find a way of sharing the pain." He said after 6-7 years of no inflation, "there is room for a little bit of inflation."

He said being inventive with the leisure and entertainment experience in garden centres with £8-10 average spend in the cafe and £20 in the shop, would keep garden centres prosperous.

"People want a treat even if things get a bit tough." But he said interest rates rising is a concern. If inflation is 3-4% suddenly the belt tightens." He said that the world is "cyclical" and interest rates have been low for seven years so "something will happen".

For more highlights from the Garden Retail Summit, click here.

Alton Garden Centre director Andy Bunker said a Dutch 13cm orchid might now come in a 11cm pot to keep the £12.99 price. He said double plus VAT rising to 2.6/2.8 mark-ups and trying to achieve the same margins on plants as restaurants might come under pressure. He questioned marking up 30p primroses to £1.49.

He added: "I'm not worried" about the issue, partly because the vote was in June and not at the start of the season, giving the industry the chance to adapt. He said Brexit was seldom brought up at Essen last month, adding: "Buxus is up a little bit and other products but it doesn't bother me." He said weather has far more impact than economy on garden retail, though Brexit might have brought a Christmas slow-down.

Bunker added looking further afield was an answer to buying issues but that a British grower had recently reduced the minimum value of an order qualifying for free delivery from £700 to £300 by using external transport, which was a "step in the right direction". He said Dutch suppliers could deliver within 36 hours so "wake up and smell the flowers guys".

Blue Diamond managing director Alan Roper said: "You share the pain equally." He said: "Some suppliers have mitigated price increases this year because they have bought currency, but beyond 2017 it will change shape."

He said known value items will see "reshaped margins". He suggested tools such as spades might not be able to be sold at £19.99 or £29.99 any more.

Roper said national living wage, business rates and apprenticeship levies were driving up costs. He said reductions in interest rates had helped consumer spending but in the next 12 months inflation caused by exchange rates will drive up the cost of coffee, petrol, phones, TVs and clothing. "Products are 20 per cent more expensive to import from the Far East than 12 months ago. It's quite a step change. In six months time people might wake up and say 'it's not quite stretching.'"

He said in the early 1990s interest rates reached 14 per cent and garden retail was not hit, but garden centres now sell a wider range of products so things have changed.

He said importing direct from the Far East mitigated price rises, with furniture and possibly tools, pots, lights and clothing areas where streamlined buying can cut costs. He has a new direct import manager from Premier to deal with China.

MDJ2 Associates director Clive Daley said there was a pressure on inflation to rise after companies' hedged reserves of "good" currency for many would have run out in November. He said this pressure should have started pre-Christmas but retailers have understandably waited until after the Christmas season and January sales before acting on the situation. So now that retailers are selling out of stock purchased with a better exchange rate the pressure for price inflation is on.

He said on pricing: "Now is the time for suppliers and retailers to be more collaborative than ever before. Retailers need to be open to these discussions and suppliers should explain the complete picture of what has changed since they last set pricing to be open and transparent in order to help understanding and have a sensible discussion on the situation."

He added: "Consumers are much more price-savvy these days because of discount chains and on-line price visibility so we need to be careful with inflation so as not to disrupt the growth we have had."

Dutch TV filmed the event for a Brexit news item on Javado delivering plants to Alton Garden Centre.

For more highlights from the Garden Retail Summit, click here.


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