Will office supplies costs rise after Brexit?

 

Theresa May will trigger Article 50 and officially start the Brexit process on Wednesday 29th March. It is said that the UK must prepare for years, if not decades, of negotiating. 

So what does this mean for British business? The pound slipped against both the dollar and euro as the Article 50 date was announced. Businesses are left with reports of economic turbulence and cost increases ahead. Will it mean job losses? What can we do to prepare for - or offset - rising costs? 

The only certainty is uncertainty – for now at least.  Back in July the Bank of England confirmed that Brexit had already started to impact the financial stability of the UK, with the Independent reporting that 49% of British businesses reported feeling pessimistic about the economic outlook for 2017. The banking sector and property industry in particular suffered, but what about the wider business landscape?

Combat rising costs

Fast forward eight months and we know that some office services suppliers have already increased prices due to the Brexit decision. Major players point to a weak pound and rising costs, but Brexit has also been an opportunity to raise margins.  

With over 30 years experience in the office supplies industry, I have seen the market fall and recover many times. There is inflation in the market and suppliers will implement price increases. But rather than accept rises of 6% or 7% whatever the reason, it is possible to save money (on average we save 20%).

When approaching contract management or renewal it is imperative to:

  • Stay informed
    Is your supplier using Brexit as a mean to increase prices? Ensure you know your current pricing and expenditure.
  • Understand your consumption
    How much do you use of which products? Ensure that your core/non-core lists accurately reflect your most used products now - not just those agreed at the start of the contract. Are these the most suitable products available or are there more effective or cheaper alternatives?
  • Enforce order process
    Do you have a robust and enforceable order process in place? So many businesses make savings, only to see costs rise again due to rogue ordering. Provide best practice staff training. 
  • Look at the whole picture
    Is your business starting any new large projects, or altering staff numbers? How will the wider plans of your business affect your expenditure?
  • Challenge your suppliers
    Are they taking a proactive stance in helping you reduce costs, such as recommending alternatives, monitoring core spend and considering product consolidation?

These are all actionable areas that will enable you to reduce costs now. And if you don't have time to run the project yourself we are experts at auditing usage and benchmarking costs for clients. 

The UK is entering extremely long trade negotiations and unlike the exit deal, which is limited to two years, there is no deadline for a trade agreement. So while we won’t know the precise trade implications for years, there is no need to wait - you can reduce costs now.
 

Updated March 2017

Footnote from September 2016 post:

A recent Markit/CIPS survey showed that business activity in services and manufacturing shrank in July - at its fastest rate since the global financial crisis in 2009. However the August figures are bouncing back: the service sector saw its largest month-on-month increase in the survey’s 20-year history, while manufacturing was at its highest in 10 months, as work that had previously been postponed began. 

References

http://www.independent.co.uk/news/business/news/uk-banks-and-businesses-count-the-cost-of-brexit-as-pessimism-takes-hold-a7120896.html
https://www.theguardian.com/business/2016/jul/23/brexit-one-month-after-referendum-blight-predictions
http://www.foxbusiness.com/markets/2016/09/06/cost-uncertainty-after-brexit.html

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