On the way home yesterday I was listening to an interview on Radio 5 Live. As far as I could tell the interviewee was some form of economist or business expert (I joined the program half way through so I missed the introductions!). What he was explaining was that over the past 18 months freight, and the costs of freight, in all sectors varying from food to clothes to all sorts of good, has risen quite sharply.
Now as these prices have been going up, manufacturers have been squeezing as much as they can out of their suppliers to try and off-set the rises in transport of goods. But, as the business expert was explaining, this has now reached saturation point, and businesses are going to now have to make the choice of either starting to let it eat into their profit margins further, as they have already been doing. Or, to pass the costs increases onto the consumer, and hope that their customers will appreciate their quality of goods and understand why they have had to raise their prices.
This situation is also going to be exacerbated twice in the coming months. Firstly because of the upcoming spending review. If people’s buying confidence suddenly starts to wain, then sales of all goods are going to suffer. Then a second squeeze is going to come in the form of the VAT rise to 20% in January. Now we in the window industry are all quite sure that this shouldn’t make much of a difference to the buying public, but the business boffin being interviewed seemed concerned that with retail prices going up, spending being cut back and VAT on the rise all combining, perhaps we need to be worrying just a little.

So, it’s time for Primark to stop selling T-shirts at £2 as we all know it’s not sustainable. Pasties from Greggs may go up to a £1. And from a window industry point of view, companies need to stop selling windows so cheaply and start to rebuild their margins again!

Gone are the days of genuine ‘low low prices!’