I run a neighbourhood store and post office in a residential area in High Wycombe. It’s a community store with a very loyal customer base. In terms of category, it’s a traditional CTN – confectionery, tobacco, newsagent – so drinks, crisps and snacks are the core drivers of trade.
My main worry about the sugar tax is that it could drive down sales overall. I read in Retail Newsagent magazine that there may be a 15 per cent decrease in sales; if that was the case, something would have to give. I could probably take it, but a lot of other independent retailers, especially if they’re more heavily dependent on soft drinks, will have to close.
Nearly everybody buys soft drinks, so any tax is going to have an impact. Drinks are an important part of businesses such as mine, because they’re an impulse product. Some people might not enter a shop with the specific intention to buy a drink, but they could suddenly think “hang on, I’m thirsty” and pick one up – if it’s at an affordable price. That whim and the ability to satisfy it are key.
Naturally, there’s a mixture of demand. You might have one person asking for a fresh smoothie while another asks for an energy drink. It’s not just carbonated drinks either; water is very popular now – ordinary water, flavoured, still and sparkling are all doing very well. In any case, the business needs to be able to provide it.
As people get more health-conscious, you do see a shift in people’s drinking habits. There’s a greater variety of sugar-free drinks available; now you’ve got sugar-free and calorie-free. The irony is, though, that as the range of less sugary drinks has increased, rates of obesity seem to have, too.
The sugar tax represents yet another difficulty in an already challenging economic climate. It would affect an important category in my store, which is crucial to profit and a massive footfall driver. Since the National Living Wage kicked in, every hour that I’ve got staff in impacts me even more. I’m spending £30 more each day; that’s a lot of money to a shop like this.
It’s far too early to suggest that the sugar tax may lead to me to reduce my staff, but ultimately I’ll have to scrutinise every operating cost in detail. The pensions issue, again, adds to that stress, as I’m going to have to offer a scheme to all members of the workforce. The question is: where in the supply chain can we absorb this new cost?
It’s frightening how much the sugar tax could affect small businesses. The beauty of our country is that we encourage entrepreneurship, but the sugar tax is asking businesses like mine to work with their hands tied.
My store and others like it are staples of the communities they serve; the shop supports local football teams and charities, because it’s profitable. Take away such an important category of the business away and you reduce the role the shop can afford to play locally.
For more on the Sugar Tax, search #canthetax.