RISING COSTS
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is going to happen, so all the manufacturers and suppliers can do is say there are going to be some price increases, but right at this moment, they can’t tell you what they are going to be until things become a little bit clearer. “We are seeing this right through the chain, from customer, through dealer to supplier to manufacturer, it is affecting everyone’s business, but at this time no one can say by how much.” Steve agrees with Mark that the Energy Bill Relief Scheme will “soften the blow” but by how much is debatable. “Some chip shops are saying they might have to close for a couple of days a week in order to save money and stay open, but you cannot close an office products business down on a Monday or Tuesday, so we will have to be creative in how we mitigate the effects,” he says. Closures coming Steve adds that he expects that the current economic conditions will result in some businesses in the sector closing. “It may lead to acquisitions or some mergers too, but we have already seen across the industry some of the smaller dealers have had to shut up shop, and I don’t think we have seen the end of it, unfortunately. “This is where you need the dealer groups, suppliers etc working together to give as much assistance as possible to those smaller dealers to help them get through these times.
says Mark. “Sustained rising prices result in higher cost (e.g. SG&A, financing cost) to the businesses and impacts profitability,” he says. “It also restricts our ability to deliver fiscal savings to our customers and indeed means that over time we are forced to pass an element of these through to our customers or partners. “Ultimately many procurement exercises have been built upon achieving financial savings, which clearly becomes challenging, if not impossible. This is also true across the board, as rising fuel costs heavily impact both our sales and service organisation too.” One of the worrying factors for many businesses is that there appears to be no end to the rise in costs in the short-term. “At this stage it is not possible to be certain [when prices will stop rising],” says Mark. “The current rate of inflation is 9.9% and the Bank of England expects that it will start to turn down in the next two years.” Uncertainty reigns Steve Carter, managing director of Advantia, agrees that rising prices are affecting every business in the sector. “Pretty much daily - certainly since chancellor Kwasi Kwarteng’s mini-Budget - there have been notifications coming through from manufacturers and suppliers about potential forthcoming increases in price,” he says. “So many products are pitched against the dollar, and given what the pound is doing against it, prices are rising. But no one has a crystal ball to see what
many procurement “
exercises have been built upon achieving financial savings, which clearly becomes challenging, if not impossible
”
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