21st Jul 2016
Currency experts expect the value of the pound to remain at least 10% below where it was on 23 June, which could cause the price of imported goods to rise.
Official Government figures show that the UK imports 40% of its food, and while many big food retailers have hedged against currency risk and a fall in the pound, these hedges will begin to unravel next year.
Though Sainsbury’s CEO Mike Coup believes such inflationary pressures won’t necessarily be passed on to customers, in an interview with the BBC he claimed: “In the face of inevitable cost inflation, the grocers now have very little option but to raise prices for consumers.”
But it’s not just food retailers that could bear the brunt of rising prices. The motoring, electricals and fashion industries also rely heavily on imports, and may be forced to re-evaluate what they charge customers. “Few clothing players will be able to fully absorb increased costs, or risk weakening margins, resulting in price hikes for consumers,” predicts Verdict Retail senior analyst Kate Ormrod.
But price hikes don’t have to be bad for business. Good customer service can help to combat the negative effect of rising prices, research by the Institute of Customer Service shows. According to the latest UK Customer Satisfaction Index, there are a number of factors that influence where customers choose to buy – and price is not deemed to be most important. In fact, the report suggests that customers favour high levels of customer service, even if it costs them more.
“The findings highlight just how powerful excellent customer service is in terms of tangible business benefits,” says Jo Causon, the Institute’s chief executive. “Getting it right first time’ has to be a prerequisite for any organisation. Customers expect to be dealt with quickly and competently – as soon as they start to feel let down or ignored, their trust is lost. It’s important that businesses take this insight on board if they are to continue the positive trend in addressing customer needs.”