Energy costs in supermarkets and retailers in general already accounted for 10% to 20% of wage operating costs in various countries around the world. An expected increase of 400% in energy costs now makes it the largest and most problematic business cost in dealing with it as it will now represent 50% -70% of the general expenses in the food retail trade. Similar problems occur in heavy industry.
It is a given that consumers believe that increasing energy costs will reduce their disposable income by 15% to 20%. The negative effects of chains are likely to be out of control by 2022. When asked if prices will increase by 10%, most believe that consumers will reduce their spending by more than 20% in all major consumer product categories.
The declining trend in consumer markets has already been recorded in recent holidays. There are no magic solutions but a combination of initiatives by governments could mitigate the serious consequences:
- At European level, the problem of excessive energy costs creates a new situation of competition rules due to inequalities between countries. The EU must immediately address these inequalities by allowing countries at a disadvantage to implement three plans to make businesses more competitive and local communities more sustainable.
- At the national level, in addition to the horizontal subsidy for electricity and the discount on natural gas for domestic consumers announced by the governments, there are other open issues such as those of non-retroactive charges for the compensation of surplus producers of RES. Most Western European countries have a low VAT rate on basic foodstuffs, typically between 4% and 7%. VAT on these products should be harmonized in all EU member states.
- For businesses, the challenges of increasing productivity, lean management and economies of scale, automation and continuous improvement of operating costs are urgently returning. In addition to the above skills there is a need for specialized staff in the management and communication of incremental pricing trends.
- At the same time, smart consumer behaviors are necessary and more logical to reduce the cost of living. Apart from the careful consumption of electricity, the smartest and most targeted use by consumers to save money is the selection of organized offers in supermarkets.
