Bira says government’s calls for lower prices will hurt retailers

The British Independent Retailers Association (Bira) has responded to announcement that business leaders are being asked to “help tackle” the cost of living by cutting prices.

In the government-run campaign which is believed to start running next month, businesses will be encouraged to join the campaign by introducing price-cutting measures.

Andrew Goodacre, CEO of Bira, expressed concern about the campaign which he said would harm independent retailers further.

“Asking retailers to reduce prices is a flawed idea from an independent retailer perspective,” he said. “The business tsar David Buttress believes that retailers can cut prices by reducing spend on marketing spend – a policy clearly aimed at the large retail chains because small indie retailers do not have large marketing spends to start with.

“Such a policy is likely therefore to disadvantage the thousands of smaller retailers who struggle to compete on price in normal times.

“This policy also assumes that retailers are adding on all the increases they are experiencing, which is simply not true. Supply chain inflation has been ahead of consumer inflation for some time, and as a result independent retailers have been operating on reduced margins by suppressing the retail prices.

“Add in the huge increases on energy, wages and business rates, and it becomes clear that the idea of further reducing the profit margin is unrealistic.

“We believe that government intervention is needed to reduce prices and stimulate demand, and the best way is to reduce VAT (as they did for hospitality during Covid). With inflation at 10 per cent, VAT income has been increasing for the government, giving them the opportunity to support businesses and stimulate consumer expenditure.”