‘Indefensible’: cost-of-living crisis hits sustainability sector | small business

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With just one week left until Christmas, shoppers are scrambling to pick out the ultimate gifts — and retailers are vying for much-needed year-end gifts.

For many small businesses in the UK, the cost of living crisis has hit profits. For those whose mission is sustainability, the adverse impact has been enormous.

The independent sustainable products retail sector enjoyed rapid growth during the early months of the Covid-19 pandemic lockdowns, as entrepreneurs launched home-based startups and an online shopping boom.

However, the economic weather has changed dramatically since last Christmas, with many shoppers prioritizing cheaper gifts over sustainable gifts. Add to that the disruption to supply chains and the increased cost of doing business due to Russia’s invasion of Ukraine – and in some cases Britain’s exit from the European Union – and the result is hundreds of independent businesses closing this year, while many others struggle to stay afloat.

Dispensary manager Fay Watts, in Salford, is preparing for her last few days of trading before it reluctantly closes its doors for good. At its flagship store, it offered a household product refill service, and for a while, business was booming.

“We opened in 2019 and business has been good throughout the pandemic,” she says. “But the past six months have been very difficult and I haven’t been able to pay myself for a year.”

Watts adds that her mental health has taken a toll from the struggles of work and mounting debt. “I didn’t really understand ‘the death of Main Street’ before I owned a brick-and-mortar store. But it’s very hard to change consumer habits and it’s hard to compete with the convenience of supermarkets.”

The Zero Waste track, which began life in an Edinburgh flat in 2018, will close at the end of January. Co-founder Giulio Corsi says the sustainability sector thrived for two years but in 2022 “demand has fallen dramatically,” resulting in a 40% loss in sales compared to 2021. “Add to that an increase in rent and energy bills at an all-time high.” , and the ever-increasing cost of ingredients… it just couldn’t be sustained anymore.”

Annie Creech, founder of London-based Funky Soap, says 2022 has been the toughest year since her company began trading a decade ago, as the Russian invasion of Ukraine has taken its toll. “Once the war broke out, the price of a lot of our components doubled, seemingly overnight,” says Kriesche.

“We’ve come this far and we haven’t given up,” says Annie Creech of London-based Funky Soap. Photo: David Barry/Pennsylvania

Several suppliers folded and by July she was struggling to pay her staff and discussed winding up the business with her accountant – “a really low point”. However, the restructuring provided a much-needed boost and helped her seize the opportunity to experiment with new approaches.

“We started looking at each component and working out how to buy it in bulk and at a cheaper price,” says Kriesche. “We also focused a lot on gifting and personalization. We’ve come this far and we’re not going to give up.”

Manchester-based sisters Trina and Charlie Gill run Life Before Plastic, an online store of sustainable products made by independent zero waste retailers. The idea came from a trip to Nepal in 2018 and the company has grown steadily for three years.

However, as the cost-of-living crisis continues, the number of suppliers has dwindled dramatically, Giles says. They cite several, including Naked Necessities, The Kind Store, and The Beeswax Wrap Co., that have folded in 2022, with more closings happening almost daily.

Charlie and Trina Gill of Life Before Plastic say that 20 of their 100 suppliers have gone bankrupt in the past six months. Photo: Life Before Plastic

In the latter half of the year, 20 of their 100 suppliers went bankrupt. November sales were down more than 50% year over year.

“For us, that means fewer options and less support for makers,” says Trina. “We’re in gifting season now, and you can really see the drop.”

The cost of sales also skyrocketed as the sisters had to entice customers with discounts or free gifts. “This is pressure that comes from the big companies that can afford the sales costs. For us, in the end, it comes out of our pockets.”

Trina explains that although zero-waste products usually last longer than cheaper alternatives, the high price tag makes them too expensive for those living on paychecks.

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Britain’s exit from the European Union had an indirect effect. “Selling to Europe became very expensive because customers had to pay postage plus customs and VAT,” says Charlie. “We made the decision to stop shipping internationally, which cost us 20% of our customer base pretty much overnight.”

Colette Webb, founding owner of online sustainable produce retailer Vera-Bee, has had a “clear downturn” in recent months, saying revenue is down about 30-35% year over year.

Established in 2019 in their studio in West Sussex, Webb’s business stocks handcrafted, plastic-free items made by other small UK businesses. As the business prospered, she rented a larger commercial unit but has now moved back into her studio to save money. “Attracting new business is very difficult right now. Vera-Bee is my only source of livelihood so I had to tighten my belt.”

Nevertheless, Webb remains quietly optimistic. “Loyal customers we’ve had for two to three years stay put; they understand what we do.”

Dean Harris, co-founder of sustainable shaving products brand Shoreline, says the seasonal increase in retail sales from Christmas shopping began a month later this year, “near the end of November.”

“It was clear that people had less money to spend after the first energy bill fell on the doormat…a lot of people had to de-prioritize sustainability,” says Harries.

He plans to adapt to harsher economic realities by moving Shoreline away from wholesale and retail, at a time when mass orders and repeat customers are hard to win.

Shelly Brown, founder of The Good Life, which has two stores in Stockport, says trade has “dropped dramatically” this year and has shifted its focus to “just staying alive”.

Brown says many of her regular employees have to go back to supermarket shopping. She has adapted by selling online but admits it was “very difficult and stressful”.

Trina and Charlie Gill are also adapting to survive the year ahead, providing corporate gifts and training to companies that want to improve their ESG (Environmental, Social, and Corporate Governance) credentials.

“The cost-of-living crisis has been the nail in the coffin for a lot of small businesses that often don’t do it for profit, but because they care. If they’re not leading the way, then who is? They’re not politicians,” says Trina.

As Watts closes her store door one last time, she sums up the mood: “Money is tight right now, but we have to ask ourselves what we value and where we want to spend our money. Investing in local and sustainable businesses is investing in a future we all definitely want.”

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