Carole Jones is 'Shooting from the hip'
As an industry, how should we cope with the falling pound? There is no doubt about it, it’s a dilemma!
In just six months, the cost of our imports from Spain have risen by 18% with the falling pound, and despite the best intentions of Brexit and re-claiming our sovereignty, it really doesn’t help our bottom line right now! Add to this a two year negotiation period after Britain is anticipated to invoke Article 50 in early 2017, and it’s likely to take some years before we see sterling strengthen.
We’ve already seen retail giants such as Unilever start a battle with their clients after attempting to introduce a 10% price increase. Now, what are the smaller British companies going to do?
we simply don’t feel comfortable passing on all our extra costs directly to our clients
In our case, at Germaine de Capuccini, we simply don’t feel comfortable passing on all our extra costs directly to our clients. Whilst our products offer superior results to many, it’s too much, too soon to be implementing price rises of between 10%-20%. We would simply drive business to competitors who are more driven by price.
So what does this mean for us?
Inevitably, we need to increase our prices a little more than normal, but we also need to take more care with our costs. During what has been a fantastic growth period for us, it’s a real kick in the teeth to have to start cutting back.
Generally in our industry, there is a great expectation for free samples, point of sale, gift bags, raffle prizes, free training…the list goes on, but something has to give somewhere along the line.
We can’t be alone in this – even those British skincare houses will still need ingredients which are sourced outside of the sterling area, and many manufacturing processes actually take place outside of the UK.
No-one can predict with any certainty on how long it will take for the value of the pound to rise again, or indeed whether it will rise to levels that were seen prior to June 23 2016. In February this year, the IMF said that sterling was over-valued by around 5% and 15% in 2015, while just before the referendum the IMF put the over-valuation at a higher rate of between 5% and 20%.
So, right now, where does that leave us all? For those who export, it’s great news and business should be increasing, but this really does not help our UK based consumer who will be faced with higher prices.
Unfortunately for beauty lovers ... some of your skincare products will see a rise in price very soon
Unfortunately for beauty lovers, many more products are imported than are manufactured in the UK, so there’s a very good chance if you’re reading this, some of your skincare products will see a rise in price very soon, if they haven’t already increased.
Eighteen per cent is simply out of the question, so we’ll have to take a hit and look at where savings can be made.
In such a competitive market, it’s going to be a very difficult decision with no easy answers!
Carole Jones is Director of Totally UK, leading suppliers of Germaine de Capuccini, Universal Contour Wrap and the London Spa Company