Ways to avoid price inflation shown at Glee

Innovation, new products, growing business, spreading price increases across the supply chain and being clever with production and packaging are all ways that suppliers are meeting the challenge of currency-led cost increases.

GIMA director Vicky Nuttall said members were talking about a cost base increase but not so much about increasing prices. 

GIMA members say raw materials have risen more than 13% in the last 12 months, with a 5% increase witnessed  since the beginning of 2017, with exchange rates post-Brexit to blame. This could lead to a lack of new product development and innoavtion, the trade body said ahead of the Glee trade show last week.

Speakers at a GIMA meeting in March said some prices were up 20% but only 5% had been passed on.

But Nuttall said after the show: "I'm encouraged to see so many new products and people investing. It's encouraging to have price not as the main talking point. People are still innovating." She gave hydroponics as an example.

Price is still there but people are trying to be creative, and putting costs elsewhere, through innovation. There's lots of me-toos as well but still a lot of inovation."

LOFA vice chairman Pravin Patel, of seasonal decorative products company Premier Decorations, said his company launched eight new ranges at Glee over with 500 new products as a "massive range review".

He said this was the biggest new product range at the show. Smart Garden launched 350 products including 50 solar lights.

Natural pest and disease controls were prominent, with Neudorff, SBM, Scotts, Westland and Ecofective promoting ranges.

Remote control products were abundant too. Westland’s Plantpak has a new range of two intelligent hydroponic kits to grow herbs, plants and flowers all year round, with smart electronic control including power and water shortage reminders and self-watering chambers for automatic watering and irrigation.

Other companies including Weber, SmartPlant, Gardena, i Glow also introduced tech smart solutions at the show.

Patel said: "We have to give the trade something different and new. We're looking to add more for next season to build on what we have just launched."

He said price has not come up too much and catalogues went out with RRPs, rather than wholesale prices, a different way of presenting pricing.

Patel added: "People are generally accepting there are going to be increases, as long as they are fair and reasonable."

Smart Garden's Paris Natar said there had been a 14% average currency hit plus inflation in Chinese labour, so since the Brexit vote on 23 June 2016 there has been a 20-22% overall inflation effect, but the company has managed to pass on less than 1/3.

He said: "There's lots of things you can do apart from price. We have 300 new products, which is 40% of our business next year, at higher margins."

Negotiating the supply chain down and finding new factories are other ways to cut costs- "there is not just one lever". The company is also 30% larger than a year ago, which helps with overheads. 

Natar said: "Don't stop developing just because costs are increasing." 

Patel said switching Chinese factories because they offered cheaper manufacturing did not necessarily mean overall savings: "You spend time teaching them what you want. It's a risk not worth doing even if it's cheaper."

He gave as an example of a way to cut costs changing a colour box on an LED candle product to a cellophane wrap with label, which he said was better and because the product was established you don’t need the box anymore. He said the saving had been passed back on to retailers.

Patel added that wholesalers should ask themselves: "What can you get away with as a  minimum increase?" He says sometimes that means decreased margin along the supply chain "to keep retail on a par" and "to make sure customer doesn’t walk way" after lengthy efforts to make a product such as LED candles a habitual purchase.

GCA chief executive Iain Wylie said he found Glee had less innovation then it used to: "The more you go , the less you see. I've been going 20-odd years and back then there were new chemicals and innovative new ways of applying them and that's not happening now, and that was all of hall five.

"Solar lights are the buzz word, but at the end of the day they are a different style of light and not necessary innovative." 

He said innovation was difficult to quantify and in the end, the show was simply "about doing business".

Glee visitor numbers when announced are likely to be similar to 2016, when they were around 7,000.


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