The Shorthand – Retail Sales Slow Down

Welcome to The Shorthand, your new weekly digest of the top news stories that affect small businesses in the UK, breaking down what's happening and why you should care.

And all in under 5 minutes.

Go on, put the kettle on and we’ll have you caught up with the the most pressing business news stories of the week by the time you’ve finished a cup of tea.

1. Exports of fresh produce delayed at UK border

What’s it all about?

Ever since Brexit, the sight on the news of long queues of haulage lorries waiting to get through customs at Dover has become commonplace. The situation this week, however, is somewhat heightened. A perfect storm has gathered in which bad weather, additional seasonal Easter traffic, continuing Brexit-induced delays and the suspension of P&O ferry routes have combined to exacerbate the problem.

Sky News is reporting that hauliers are facing up to 25-hour delays at the Port of Dover, with each truck losing £800 of value form their cargo as fresh food sits rotting in traffic jams.

Despite calls from the fresh-produce haulage industry to prioritise clearing the backlog of perishable cargo, the government has insisted that any fast-tracking is ‘unrealistic’, meaning that there will be no quick end to the problem of fresh food rotting in lorries and losing businesses money.

Why should you care?

Any businesses in the UK that move fresh produce should be concerned by this development. From arable farmers and abattoir owners to meat packers and fresh food retailers, a large swathe of British industry will potentially be affected by increased wait times for fresh perishable produce being exported to mainland Europe.

Any delay, such as the 25-hours being experienced by some hauliers, will impact the shelf life of fresh produce, reducing its value to consumers. Indeed the chairman of the British Meat Processors Association (BMPA), Nick Allen, commented that the reality of the meat industry means that small UK businesses who export to the continent will inevitably lose out to overseas competitors if these delays continue:

In our 'just-in-time' food supply chain, this kind of failure to supply means that we start to lose EU customers, who turn to other countries to provide a more reliable supply of product.

2. Retail sales slow down due to cost of living crisis

What’s it all about?

In figures widely reported by outlets including the BBC and The Guardian, retail sales in the UK grew over the month of March 2022, but not by as much as expected, and at a rate that was less than half the rate of growth during the previous month. This represents a slow-down in growth of consumer spending in the retail sector that comes at a time of significant spikes in the cost of living.

With inflation in the UK economy hitting 7%, consumers are retrenching their spending and the retail sector appears to be suffering as a result. Soaring energy bills and the rising cost of fuel are contributing to a situation in which consumers are curbing their spending in many different sectors, from essentials like food to non-essential luxuries like fashion and travel.

Why should you care?

For retailers up and down the country, this news may be a cause for concern, but will not necessarily come as much of a surprise. With the cost of living squeeze at the forefront of many people’s thoughts, it is unsurprising that UK consumers are exercising a little more caution with their shopping budgets.

The real significance of this slow down is to do with its timing. The figures, released by the British Retail Consortium (BRC) show that total retail sales grew by just 3.1% in March 2022, compared with 13.9% for the same period last year. The difference being, the UK was still very much in lockdown in March 2021, whilst March 2022 was the first full month following the ending of all Covid-related restrictions in England. In short, consumer spending grew significantly less without Covid restrictions than it did with them in place.

This points to something of a crisis of consumer confidence that is affecting the retail sector. Helen Dickinson, the Chief Executive of the BRC, made clear that this worrying issue of low consumer confidence is unlikely to be resolved any time soon:

Households are yet to feel the full impact of the recent rise in energy prices and national insurance changes…consumers face an enormous challenge this year, and this is likely to be reflected in retail spend in the future.

3. Number of small businesses looking to hire hits 7 year high

What’s it all about?

This story, first reported by HR News, and based on research conducted by Novuna Business Finance shows that, in amongst an atmosphere of caution, there is cause for optimism for small businesses in the second quarter of 2022. In short, there are reasons to be cheerful on two fronts:

• Two thirds (67%) of small business owners and decision-makers polled had specific plans to achieve business growth in Q2 2022, which marks the highest proportion since the start of the Covid-19 pandemic.
• One in six small businesses are looking to hire more staff in the next quarter – three times the proportion a year ago and the highest figure in the last seven years.

Why should you care?

In amongst a business news landscape that feels a little bleak right now, this news is a real positive for small businesses. The proportion of businesses actively looking to grow has returned to pre-pandemic levels. One could cautiously say that this indicates a change in the mindset of small business owners, shifting from ‘surviving’ the downturn of the pandemic, to actively growing their business and expanding their workforce in the post-Covid economy.

In amongst the optimism, however, small businesses have plenty of reasons to remain cautious. Keeping fixed costs down remains the number one priority for small businesses looking to grow, with 35% of respondents citing it as their primary concern.

Superscript is here to help the UK’s small business community keep their fixed costs under control, with a range of flexible business insurance options that are built around you, meaning you never pay for more than you need.