Firms must accept low profits to help our customers get through this crisis, says Iceland boss Richard Walker
EVERY Monday I get a weekly report of what is going on in our stores around the country and some of it is very unpleasant as people get more desperate.
We are losing stock through theft but we are also seeing a sudden rise in serious incidents, such as people using weapons or punching staff to steal food.
People may be stealing because money is now so tight.
I was worried about our customers before the cost-of-living crisis when they had only 25 quid a week to spend on food, but now it is serious.
My weekly report also reveals how some customers get to the till and start to unload the trolley on to the conveyor belt but are asking the cashier to tell them when the total reaches £40.
Then they stop because they can’t spend a penny more.
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Their families will just have to do without the rest of the shopping.
Right now, all of us in business should be prepared to accept a share of financial pain — just as our customers are doing.
We are in the midst of a global crisis, not one peculiar to the UK or caused by Brexit.
Our current inflation rate of nine per cent is much the same as that being experienced in the USA and the EU average, with many East European countries faring a good deal worse.
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This is obviously small consolation for hard-pressed shoppers, especially those who are older, or more vulnerable.
But also parents who might feel most anxious as they face handling extra spending on food and essentials while their kids are on school holidays.
That is why we are offering cashback in our stores on government school meal vouchers.
More than 1.5million over-60s have used our Tuesday discount day.
Our data also shows quite clearly that customers are down-trading premium luxury lines into everyday value lines.
That is why we have held the price of all our £1 lines until the end of the year, because they are absolutely crucial to consumers and we are increasing the number of lines that we sell for £1.
We were making 25 per cent on those items but now we will be losing money on them and it is costing us millions, but we think it is the right thing to do for our customers.
All businesses have to take on this hardship, just like our customers are.
So we are investing. We are accepting low profitability.
I think it is really important for brands such as Lurpak and Heinz not to put their heads in the sand and to appreciate just how much people are struggling.
We are in a global crisis
Customers tell us they are also really feeling the pinch on petrol and people are now thinking twice about spending on petrol to drive to the shops.
That is why we have reduced the threshold for using our home delivery service.
The Grocery Institute recently predicted food inflation will reach 15 per cent by the end of the year and I don’t disagree.
Unfortunately, there is no quick fix.
The war in Ukraine means all prices will stay high.
The labour shortages that we are seeing all around the world, not just in the UK, will stay with us.
And when the energy price cap is lifted in the autumn it is going to lead to further pressure on household budgets.
There may be some cooling off in the increase in some commodity prices but overall I think it will get worse before it gets better.
Skipping meals is a reality
My father, Malcolm, founded the company 51 years ago and he remembers retailing in the late 1970s when inflation was more than 20 per cent.
So we have been here before and, as a private family business, we can make the right choices to make sure our customers get through this.
Because we are a private company we don’t have external pressure from shareholders so we can just make very quick decisions so we can invest now and we believe it will pay off in the future.
Cases of people skipping meals is a reality and we are seeing an alarming increase in usage of food banks and people getting driven to unacceptable doorstep lenders, the loan sharks, and getting in this spiral of debt.
So we came up with an idea to partner with a not-for-profit, ethical lender, which is actually backed by the Government, where we can offer our hard-pressed customers affordable microloans — from £25 to £75.
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It is a great example of how businesses can think laterally and come up with innovative partnerships to help people through the cost of living crisis above and beyond just trying to sell food at discount and give away vouchers.
I am also writing a White Paper on it to present it to government to show how companies like ours can use our data on what is really happening out there to come up with suggestions to ease the burden of the crisis on hard-pressed families.
