WITH the rising cost of food prices, the Supermarket Association president Rajiv Diptee is making it clear that they are not “price setters” but “price takers.”
In a statement e-mailed to Newsday on Friday, Diptee said, “The retail food industry has noted with great consternation the rising costs of doing business coupled with decreasing revenues, higher overheads in terms of rents, utilities and taxes, flat sales in what is a worryingly stagnant consumer environment and an increasingly difficult labour environment in terms of the pool of labour and the application of those laws as they apply to labour.”
Spiralling crime adding to the security costs has not helped and the lack of foreign exchange income and accessibility has caused crippling burdens on the side of supply creating a strain on the side of retail.
“With companies rationing their US currency, one will find prices have tended upward to compensate for their downturn in forex. A lack of liquidity on one side and a lack of cash flow on the other has forecast an urgency on both sides. The flow of the economy has slowed down and put the retail sector in a quagmire of stagnation.”
The southern communities, Diptee said, have been most severely affected by the acute shocks of economic contraction and consumers are moving away from brand loyalty, instead opting for value for money.
He said the association members have to now engage in new dynamics to stay afloat and competitive.
He said the current socio-economic climate presents a mix of variables and at a time when macroeconomic indications are presented in a positive light, there is a stark contrast to the musings of what is happening at the ground level.
“While the nation finds its feet in the country’s core competencies, that is the prevailing oil and gas markets to negotiate the best possible outlook for the budget calendar, the microcosm of the retail sector is a more telling indication of the microeconomic impact that paint a vibrant picture of developing trends that have become new norms at the level of point of sales.
“We are finding consumers with less disposable income and consumers that lack confidence when they come to the stores as they fetch items with the foreboding that those prices will hike.”
He questioned whether that was an indication of a lack of confidence in the retail sector or in the economy.
He said the economy would certainly benefit from an injection of spending by the administration in the short term, but hope remained in the private sector to forecast a trajectory aligned with stable governance and realistic expectations as he said there was still an appetite for doing business both locally and internationally.
“We are certainly in the midst of a wave of stagflation. Consumers want to feel confidence in the economy which means they want to feel a sense of confidence to know that there is no triage of food prices.”
An economy is in stagflation when inflation is high while demand for goods and employment levels remain low.
Diptee insisted the retail food industry had also been affected by the state of the local economy.
“Sales have been consistently slow. Business profits have shrunk to margins whereby the feasibility of continuing to do business have led some small to medium enterprises that cannot absorb the shock of dwindling returns to fold and close their doors.
“The public should be given the clarity that supermarkets do not engage in price setting at any level. Supermarkets are price takers as they purchase goods from their suppliers and distributors to retail at a rate of return that is determined by the cover required for that operation to do business and meet its expenses and pay its bills.”