The Effects Of The Energy Crisis On Our Business

Everyone is aware of the ongoing energy crisis and everyone is effected in one way or another. The obvious and I am sure, most important to our customers is the dramatic rise and subesequent caps and governement support for residential energy consumers.

Whilst the rises have been large, domestic charges have been capped and payments of at least a few hundred pounds are being made available for all domestic users. Not so business. Business accounts have no protection to date against these unprecedented rises. It seems that, as there is a limit to what can be charged to domestic customers the power companies have pushed the increases onto businesses. The actual size of the increase is unprecedented and I strongly suspect that a lot of small and medium businesses will cease trading this winter as they struggle to deal with these exhorbitant rises in costs.

I cannot speak for any other business as each negotiates its own deal with its supplier but I can outline what has happened in our case and detail the changes we have been forced into and those we are currently considering.

At the beginning of the year our unit charge for electricity was 15.95p/kWhr and our bill for the month of January, the middle of winter, was £492. In March this year our tarriff doubled and March’s bill (a warmer, lower usage month) was £796. In April in went up again by another 14p/kWhr. Our bill for May 2021 was £278. May 2022 was £1074 so up until yesterday we were paying 300% more for our electricity. It’s imprtant to note that price increases in our products during this period were not a result of these increases. They were caused by direct increases in puchase price of those products from our suppliers and increases in delivery charges. We absorbed all of the energy cost increases into the business by making some changes in the shop to try to offset at least some of it.

We are now at the limit of what we are able to do with those changes and today (8th Sept.) our unit charge doubled again. We are now paying nearly 600% more for electricity than we were at the beginning of the year. Without some drastic changes May 2023 charges are going to be around £2200 for one month. I hate to think what the winter months will be.

Obviously this is not sustainable for any business and we have been forced to take steps to offset the increases by a selection of measures. Unfortunately some of these involve increasing some prices but we have avoided this wherever possible. I have detailed below what we have done to mitigate these extraordinary increases (and future,further increases),

  • At the beginning of the year we invested £1300 in new display freezers. Under the new tarriff these freezers would now be costing us over £100 per day to run. Currently we have removed all the stock to cheaper storage freezers and switched the display freezers off until prices fall again. Obviously this decision was not taken lightly as £1300 is a significant investement to right off for a business of our size.
  • After todays increase we have recalculated the cost of running even the storage freezers and the money generated to the business by the products stored in them. Even the storage freezer we are using for the dog food is costing us £45 per month. If we sell all the products currently stored in this freezer within this time period we will just about break even for the month. In other words selling frozen dog food is not generating any income for the business, even with the recent price increases customers have seen. The only way we could continue to sell these products and make a profit would be to further increase the selling price by aproximately 50% and no one is going to want to pay that. We have therefore made the decision to continue selling frozen dog food for the time being whilst these rediculously high energy prices continue or some sort of support becomes available for business. However if there are further increases in energy costs to us we will, once current stocks have gone, have to switch this freezer off for the foreseable future.
  • Hopefully no one has noticed but we have removed around half of the shop lights. Each unit has four tubes and we have removed two from each unit. I will be looking at the sodium lamps tomorrow to see which of these can also be removed without effecting the customer experience too much.
  • We have 10 tropical fish tanks and we have changed half of these to temperate tanks. Under the new tarriff this saves us nearly £400 a month.
  • We are reviewing the number of reptiles we hold on site in the shop. We are likely to drop the holding to a few display species and publish a list of what else we can offer to order. I won’t publish the savings here as it rather depends on which vivaria we keep swiched on as they all have different power needs.
  • We are looking at pricing of our animals to better reflect the actual cost to us of each one, including the cost of keeping them in store rather than just the purchase price.
  • We will be forced to increase our boarding fees for reptiles with immediate effect to £6 per day. This represents a 100% increase on what we charged at the beginning of the year but remember, the cost to us of caring for these animals has increased by 600% in electricity alone. Food and substrate prices have also increased this year.
  • We are carrying out a review of all our prices to ensure that whilst some increases are going to be necessary, we remain competitive compared to others. We are routinely better value than the large chain pet stores and we intend to stay that way.

This is a difficult time for everyone and we really do appreciate the understanding of our loyal customers. We rely on you to keep the business afloat and want to reassure everyone that we are doing everything possible to keep prices down but I’m afraid that it’s impossble to avoid increases completely.

So far we have only had one or two unfortunate comments on the recent price increases that were trying to suggest we were profiting in some way from the situation. I can assure everyone at the moment that we, like a lot of other small businesses, are currently working merely to increase the profits of Shell, BP and the like, not our own. Everything we make currently goes on paying their bosses bonuses, not ours. Until energy prices fall or the government steps in to stop this profiteering this will continue to be the case, if we all manage to stay in business until then that is.

The Angell Pets Team

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