The British Independent Retailers Association (Bira) has spoken out against government proposals to encourage businesses to reduce prices to consumers.
A taxpayer-funded advertising campaign, expected to launch next month, will highlight companies that have introduced price-cutting measures to help shoppers with the cost of living. However, Bira ceo Andrew Goodacre believes the campaign would harm independent retailers.
He said: “Asking retailers to reduce prices is a flawed idea from an independent retailer perspective. 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.”
He added: “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%, VAT income has been increasing for the government, giving them the opportunity to support businesses and stimulate consumer expenditure.”