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High energy prices and inflation are taking a toll on U.K. businesses

LEILA FADEL, HOST:

High energy prices and inflation are taking a toll on U.K. businesses, and researchers say smaller retailers are struggling to survive. Willem Marx reports.

WILLEM MARX: In Britain, a country long ago described as a nation of shopkeepers, many small store operators today are struggling to survive.

WAZ ABBAS: One seventy-eight, thank you.

MARX: In the town of Broxburn, just west of Scotland's capital city, Edinburgh, Waz Abbas has served his convenience store customers for 23 years.

ABBAS: Perfect. Thank you so much. Cheers, guys. See you later.

MARX: But now rising fuel costs are creating fresh financial pressures.

ABBAS: Everything that comes to your door is delivered, so the fuel is going to impact it, irrespective of whether you're getting a block of cheese or a pallet of beer delivered. It is going to affect the cost of it. So it came to a point that businesses like ours couldn't absorb it any longer.

MARX: His electricity bills have also more than doubled since November, partly a consequence of the conflict in Ukraine. Despite massive government subsidies, he's worried about raising his prices further in response.

ABBAS: By how much can you put up a jug of milk? How much can you put up a bag of crisps? How much can you put up a bar of chocolate before you, the end user, thinks, well, actually, I can't afford to now eat that bar of chocolate?

MARX: If this energy cost crisis continues, Abbas is concerned he'll either need to let staff go or else force his wife and himself to work for free. Other alternatives, he says, are even worse.

ABBAS: Too many guys now are looking at, actually, either we will survive this year, or we will close our door and walk away rather than pay the bills. That is where it's got to.

MARX: Across Britain, many retailers are facing similarly tough choices. The Centre for Retail Research found that more than 11,000 independent stores closed in 2022 alone. Professor Joshua Bamfield published those findings.

JOSHUA BAMFIELD: A lot of retailers have said to themselves, there is no way we can turn the shop into a paying proposition. We're paying to keep it open, so we might just as well close it.

MARX: He says the U.K.'s current recession and inflation are only partly to blame. The move to online shopping has played a huge role too, by creating short-term uncertainty.

BAMFIELD: We talk about crisis. The British retail industry is in a stage of transition. I think that within a couple of years, it should be clearer what the right answer is in every area, and retail will be in a rather better position.

MARX: In the meantime, government support is seeking to stabilize the situation for shop owners with lower tax rates and support for utility bills, at least through this winter. But long-term trends and the changing behavior of British shoppers could create new opportunities too, says Harvir Dhillon, an economist at industry trade group the British Retail Consortium.

HARVIR DHILLON: Commerce isn't just opening up the store now and having a warehouse to store your goods and your various different products. It's fairly possible, in today's economy, for somebody to start up a business and start promoting it on Instagram and get a micro-retail business off the ground that way.

MARX: Waz Abbas says he's adapting to digital retailing as best he can, but by the time his kids are his age, he fears Britain's centuries-old tradition of shopkeeping may have become a thing of the past. For NPR News, I'm Willem Marx in London. Transcript provided by NPR, Copyright NPR.

Willem Marx