Energy costs are crippling the sector, says RGDATA, as a survey of members confirms that some are experiencing up to 400% increases in electricity prices
A survey by RGDATA, published on 20 September, revealed that essential food retailers are reporting “the most stressful period ever in business,” with energy price hikes of up to 400% since January 2022.
While some retailers have been able to limit the impact of the cost increases through affinity schemes, many of these schemes are expiring and new elevated rates will apply. Some retailers have also been able to reduce consumption through retrofitting stores, but the costs associated with this are prohibitive for smaller shops.
Retailers have called for immediate government action to stem rising energy costs and for interim emergency measures to assist with meeting the cost of the energy hikes. “The RGDATA survey indicates that retailers are experiencing an energy nightmare on every street and town in Ireland,” said RGDATA director general, Tara Buckley.
“The rates of increased electricity prices being imposed on food retailers are shocking and cannot be sustained. These shops, which are significant local employers and are a core part of the local community infrastructure
throughout Ireland, cannot sustain electricity price increases of up to 400% in some instances.
“Electricity is an essential power source for food retailers – fridges, storage, light and heat are all core components for a shop and there is very limited potential for retailers to reduce their existing power consumption. While energy efficiency and demand management measures can make a difference, these are longer term solutions and often require complex retrofitting. The Government needs to grasp this issue now and act to stop the costs for essential energy supplies further spiralling out of control. This is a national crisis – businesses have very few immediate options to address their difficulties – they cannot radically reduce use immediately, have limited competitive choice to switch suppliers, and are operating in an intensely competitive market with very limited scope to increase prices to cover increased costs.”
Shop owners highlighted a range of options available to the Government to address this crisis. They include: capping energy prices for 12 months; introducing energy credits to reduce current exorbitant rates; introducing a wage subsidy scheme to assist with managing higher costs; assistance with the cost of installing solar PV and a reduction in the red tape associated with accessing and installing solar schemes; a deleveraging of electricity prices from gas prices; repayment warehousing schemes; and a commercial rates break
Energy Survey Findings
- All of those surveyed reported increases in energy costs, with most reporting a doubling in electricity charges and some experiencing
- increases of up to 400%
70% of the respondents were with Electric Ireland, with the remainder supplied by Energia, SSE, Pinergy, and Panda
- All respondents reported that they have very little scope to reduce energy costs by reducing usage, given the demands of refrigeration, heat and light in shops
- All respondents believe that the energy market has failed and that the Government needs to intervene
- The vast majority of retailers surveyed believe that energy companies are manipulating the energy crisis to maximise profits and prices
- 80% of retailers said that the Government needs to introduce price caps on energy prices, with 70% calling for energy credits to be introduced on bills. 40% called for the reintroduction of the wage subsidy scheme to assist businesses struggling to manage costs as a consequence of energy price hikes
- 100% said Government and regulatory agencies are not doing enough to curb energy costs
Retailers indicated that the energy crisis would push them to take drastic actions, such as a reduction of overheads, including staff costs (80%), increasing prices (30%), and ceasing trading, if energy costs continue at the current levels (30%).
The survey found that retailers are keen to adopt energy efficiency measures and renewable power sources, including solar PV units, but many found that the rules to access these schemes are over complex and full of red tape. In addition, the costs are prohibitive, and even if they install solar, the payback will take years.
“This crisis is going to do more damage to small business than the pandemic ever did.”
Retailer, Co. Mayo.
“I cried when I got my latest bill – a 300% increase since January. I am so stressed thinking about what is coming between now and Christmas,”
Retailer, Co. Roscommon.
“This is probably the most stressful period we have been through. Our bill more than doubled. We simply have to increase prices. We are a small country convenience store and we feel that price increases will push our customers to the discounters. I will have to lay off staff to cover the electricity bill or consider closing our deli for the winter.”
Retailer, Co. Mayo.
“Some certainty for the coming year is needed or the viability of my business is under threat. A freeze on new charges, fees and support to maintain employment would be helpful.” Retailer, Co. Wicklow
“We are looking at a 150% rise in electricity cost at the moment, with possibly more increases to come. We need to get support to maintain our energy cost at the same level as a year ago. We should be given commercial rates amnesty. We need to be let install solar panels easier without the usual planning red tape.”
Retailer, Co. Meath
“After 33 years of the family business I have never seen anything like this. We need to get financial support urgently and price cap changes immediately, otherwise there is going to be carnage in the retail sector.”
Retailer, Co. Mayo
“We are devastated. We survived Covid-19 and this is worse. We can't trade out of this position.”
Retailer, Co. Sligo.
© 2022 Checkout – your source for the latest Irish retail news. Article by Maev Martin. Click subscribe to sign up for the Checkout print edition.