Brexit price hikes have helped

Yorkshire retailer G Craggs managing director Stephen Craggs has made post-Brexit price increases work in his favour and has decided to ‘give Black Friday a go’ this year

We’ve had a full quarter’s trading since the Brexit vote and now have chance to draw breath. As a signed-up Remainer, I cannot help but think that it could have been a lot worse. Had the Bank of England decided to rescue a falling pound by increasing interest rates, we’d have had the triple whammy of the early 80s: spiralling inflation, interest rates and unemployment – so at least they have learnt something.

The price hikes have helped so far. During August and September, we have legitimately been able to advise customers to order in advance of the increase. A growing part of our warehouse became stacked with range cookers, built-in ovens and hobs as a consequence. All paid for and awaiting house extensions and kitchens to be finished.

Feel-good

At the beginning of September, we produced a new radio commercial saying: “Our sportsmen and women gave us all the feel-good factor this summer – G Craggs continue this by beating manufacturer price increases and continuing to price match AO, Currys and John Lewis.” It took ages to figure out how to tell the public that a bad news story can be good news, so many thanks go to Team GB for their endeavours in Rio.

Once the dust settles, we’ll find out whether the public will notice that they’re paying more for electrical products. In the past, we’ve all wondered what would happen if we increased prices overnight. Now we’ll find out. There is an opportunity here for retailers and manufacturers to make it stick, but only if we hold our nerve.

It is encouraging to see that some brands are being more choosy with the distribution of their products and reaping the medium-term benefits of growth through the part of the retail industry anxious to make a margin.

Important

I have turned my back on some brands this year, because they think that a 10 per cent margin is adequate. They don’t think it’s important to plan and grow by having fruitful dialogue and they would much prefer to do the retailing themselves. I won’t name them, but you will know who they are. Consequently, our turnover has grown and more importantly gross margin has increased by an incredible five per cent. Without this, there’d be no point carrying on the fight.

The strength we have, as a trusted independent, is that we can stand in front of the customer and tell them what we like about a manufacturer and its products. There are plenty of alternatives out there that we can sell to achieve a margin. It doesn’t matter what their marketing budget is, the independent can often trump it by giving customers their honest opinion.

Generally, as proprietors, we do the buying, and we can all be fickle creatures. An extreme example I am dealing with right now is a stand manufacturer whose product snapped, destroying a £2k TV. For some reason, they don’t think they are liable, but have not explained why. Am I going to buy any more of their products in the meantime? Obviously not.

With dark nights descending, thoughts turn to ‘the season’, which has now been disrupted by Black Friday. I have been half-hearted so far, but we’re giving it a go this year. CIH has some good products lined up and I have got some sneaky deals, purchased in summer, stashed in the warehouse. With luck, the CE manufacturers will have price increases, or at least not as many sell-out promotions.

It’s make or break in browns for me this year, so here’s hoping!