Independent supermarkets in Australia report increased pressure to maintain stable grocery pricing as supply chain costs rise.
Higher fuel and fertiliser costs linked to trade disruptions in the Middle East have affected farmers and suppliers, with cost increases passed on through the supply chain. John-Paul Drake, director of Drakes, said additional charges have appeared on supplier invoices.
"Suppliers have been looking at making sure their costs are covered," he said. "They've been looking at all sorts of different ways to put a fuel tax, a surtax, a fuel levy, call it whatever you want. We are seeing a few interesting things coming up on invoices."
Despite these cost increases, Drakes has not passed on the full impact to consumers. "We are doing everything that we can to make sure we hold down the pricing," he said. "In the scheme of things, it's only a small percentage that is in the whole cost of our doing business."
Drake also called for greater transparency around fuel supply. "The fact that people are concerned, worried, and panic buying is all because we don't have that certainty," he said. "If we just had some transparency, we might not be in this place where people are panicking to buy fuel or worrying that it's going to run out. Let's face it, we're not going to run out of fuel."
Smaller retailers report increased pressure from delivery costs. Lincoln Wymer, director at Master Grocers Australia Independent Businesses Australia, said suppliers have raised minimum delivery thresholds.
"The big one's been the increase in the minimum delivery cost," he said. "Before, they might have been US$130. They're now saying we're not sending it unless it's a US$325 order now. That's really hurting the small suppliers because sometimes we don't need to spend that much money on their products."
Wymer, who is also chief operating officer of the Reddrop Group, said transport costs have increased. "I spoke to our main transport company, and he's gone from about US$13,000 a month to over US$19,500 in fuel costs alone," he said. "He nearly exclusively supplies our stores, so that US$6,500 a month has to come out of our businesses."
Retailers said frequent price changes are difficult to manage under current conditions. "The cuts that were made by the government recently helped us make the decision not to move the prices in the short term," Wymer said. "If this continues much longer, I just can't see how a grocery store or supermarket can absorb these costs into their narrow margins."
Source: ABC News
