Spar Scotland will be passing some prices onto customers to mitigate inflationary cost pressures, but is taking steps to protect the brand’s value perception.
Colin McLean, chief executive of wholesaler CJ Lang, which operates Spar Scotland, warned 2022 will be a “tricky year” for the convenience industry and stressed the importance of offering customers value.
He told Better Retailing: “We will have to pass on some costs due to inflationary pressures, but we’re working to manage that. We’re the only symbol group to have ran an 18-month TV campaign in Scotland.
“Our quarterly research shows the importance of value perception to our customers and we’re making some inroads in addressing how we support customers during what will be a challenging time.
“The TV campaign is helping reinforce the idea that you can still get great deals at Spar Scotland.”
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Describing the inflationary pressures, McLean attributed the issues to rising energy prices, the shortage of lorry drivers and changes to wages.
“It’s not easy. There are CO2 shortages, supply chain issues and Brexit. These issues are changing every day, and when combined create challenges with cost price,” he said.
“Next year will be tricky, but we will continue to work closely with suppliers and customers to ensure our offer remains competitive.”
Chilled was another area which McLean identified as experiencing industry-wide issues. “We recognise it’s poor at the moment, but we are confident there is still a big opportunity for independent retailers.”
The firm is helping its estate take advantage of the opportunity by upgrading chillers and freezers in stores. It is also investing in upgrading its multi-temperature delivery fleet. “We’re making a big investment in refrigeration. We also want to bring our fleet up to date and we’re replacing vehicles which have been there for six to seven years. It’s the first stage of an update to our vehicles.”
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Although McLean acknowledged CJ Lang had arrived “slightly later” than its competition in addressing issues at the start of the Covid-19 pandemic, he claimed its partnerships with local suppliers has given it an advantage over rivals.
“While being Scottish doesn’t make us exempt from the rest of the issues experienced by the UK, it does enable us to navigate these challenges more flexibly. We are a major wholesaler that sources 50% of products from Scotland. This has enabled our supply chain to hold up, and we’ve been able to keep our volumes moving,” he said.
McLean’s comments come as CJ lang recorded a 9.4% annual increase in turnover to £212.5m for the year ending 30 April 2021. The period also saw pre-tax profits rise to £3m.
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