In its comments, the Competition and Markets Authority (CMA) highlights that the grocery sector has experienced a notable decline in operating profits over the past year. This can be attributed to costs rising at a faster rate than revenues. Additionally, the CMA states that although there has been a historic surge in food price inflation, the evidence accumulated so far does not indicate that competition issues are the driving force behind this rise.
As part of the investigation, the Association of Convenience Stores (ACS) has provided evidence to the CMA, shedding light on the substantial cost increases faced by convenience stores in the past year. Energy costs, employment costs, and wholesale product prices have particularly posed significant challenges to these businesses. It is worth noting that convenience stores typically operate with gross margins of around 20-30%, varying based on the product mix. Unfortunately, many of these businesses have witnessed a gradual erosion of their net margin over the last year.
James Lowman, the CEO of ACS, emphasizes the relevance and timeliness of this important report examining the business costs and pressures driving inflation for consumers. He underscores the crucial role played by convenience stores in the highly competitive grocery market, especially in rural and isolated communities.
The report calls for policymakers to recognize that supporting retail businesses through this period of excessively high costs is key to promoting lower prices for consumers. By addressing the challenges faced by retailers, the industry can ensure affordability for consumers.
The CMA has expressed concerns regarding the transparency, legibility, and consistency of unit pricing. To enable consumers to make informed decisions about the best value, they are exploring ways to improve unit pricing information. Currently, most convenience stores are exempt from displaying this information. However, efforts are underway to provide guidance on fair trading and weights and measures regulations.
For more information on fair trading, you can find guidance supported by Surrey and Buckinghamshire Trading Standards from ACS [here](https://www.acs.org.uk/advice/fair-trading) and also [here](https://www.acs.org.uk/advice/weights-and-measures).
