oday’sfinancial plumber, footwear retailer David Gummers,
ow that three months has passed since the Referendum it is good to see the hysteria
talks about the relationship between footwear manufacturers and retailers My view is that any footwear retailer that
has settle down a little. The views about Brexit on both sides are still deeply entrenched and it will be interesting to see how things pan out in future. I am not going to make any political predictions, but I will make some observations on what I think will happen between footwear manufacturers and retailers.
Call me cynical, but unlike manufacturers who
did not cut prices as they should have done when the oil price halved, there will be some footwear suppliers who will immediately put up their prices to the customers. It is worth noting that petrol prices have not increased since the referendum. The best companies will have bought enough currency forward to protect against the possibility of this happening.
The currency in the longer term will find its
level and so there should not be huge volatility in prices. I fully accept some costs will go up, but as many of the good companies are asking us to print our own invoices, which is an annual saving of thousands of pounds in postage for them, I would expect them to pass some of these back to the retailer.
A cut in interest rates, which has been
signalled, would also help the supplier as borrowing would be cheaper. This of course is a double edged sword as the pound sterling would fall, causing prices of imported goods to rise. In addition, retailers, who rely on an older demographic for their sales, are going to suffer, as savers have lost a staggering 43 billion pounds in interest since March 2008. This must have an impact on business.
30 • FOOTWEAR TODAY • SEPTEMBER 2016
increases its business is doing well. The days when an established business can grow at 5% plus per annum are long gone. Prices are rising faster than retail income.
It does make it more imperative to switch
banks, electricity suppliers and insurance as often as possible to ensure you remain competitive. Loyalty to the big companies is foolish these days! They rely on inertia to maintain their market share. The price comparison sites are there, so use them. I am proud of the fact my electricity costs have fallen every year for the last five years! Mind you they will rise by 0.5% this year as that was the best tariff I could get!
PLANNING YOUR BUYING I have said before that stock is the only cost you truly have control over. As the next eighteen months are going to be uncertain I would recommend keeping purchases to a minimum. I think the manufacturers will be having to reduce their stock holdings as well, so they may clear stock to you at greatly reduced prices. Of course you do need some new stock, but this is not the time for huge experimentation.
Customers after all the seismic shocks of the
last few months want a bit of certainty, no vast price hikes and friendly service is vital in these ‘interesting times.’ Having said that, the philosophy ‘plan for the worst and expect the best’ is definitely worth remembering. Life usually does not turn out either as well or badly as you expect.
My plan is to cut my purchases by around 10%
for next Spring to see how things develop. I am sure of one thing: the world will not run out of
shoes, and if it transpires the economy is not adversely affected I am sure I will be able to source some at short notice! I think some manufacturers will be forced to loosen their purchasing rules, as they need to have good paying customers.
It is worth remembering that most
manufacturers do a good job, and deliver on time, and in return we must remember to keep our side of the bargain and pay on time. It is very economical to pay within discount terms, as this is always built into their costs, so it is really in your interest to take this settlement discount.
In conclusion, do not worry too much about
what Brexit will mean. Just ensure that you live within the means of your business and keep the purchasing well within your budget and things will settle down faster than you imagine. Trade is always slightly worse when people are feeling nervous about events. Control the costs as much as you can, be realistic about growth and watch that cash flow!
If you would like David to look at your business costs, he promises that if he cannot save you any money you pay him nothing. But for every pound he saves, you pay him 15 pence.
If you want to learn more, email David on david@fdickinsonfootwear
call 01229 580654, or visit www
.fdickinsonfootwear .co.uk .co.uk
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