• Shoppers ‘cut back drastically’ as cost of living bites
• ‘No increase’ in sales expected for remainder of 2022
• Supermarket chain hoping BPL has secured fuel cost
By NEIL HARTNELL
Tribune Business Editor
Super Value’s principal yesterday said shoppers have “cut back drastically” on luxury items to make every dollar count, while revealing the supermarket chain’s own transportation budget has soared 47 percent.
Rupert Roberts told Tribune Business he does not expect any sales increase over the remainder of 2022 as Bahamian consumers have become “very, very conservative” with their food budget in a bid to combat surging inflation.
And, while shoppers are not willing to forego quality, he added that they are increasingly focused on meeting needs as opposed to wants amid rising food prices, with “little luxuries having stopped selling”.
Revealing that the 13-store supermarket chain is itself feeling the squeeze from high gasoline prices, which are close to $7 per gallon, Mr Roberts said the weekly fuel allowance for Super Value’s own vehicles has now increased to $6,000 to cover this rising cost.
However, he added that he is more concerned about again facing $1m monthly electricity bills amid concerns over whether Bahamas Power & Light’s (BPL) anti-inflationary fuel hedging strategy remains in place to counter high global oil prices that last night stood at $110.8 and$114 per barrel on the West Texas Intermediate and Brent Crude indices respectively.
“Consumers have cut back drastically. Little luxuries have practically stopped selling,” Mr Roberts said of shopper response to rising inflation impacting food prices and other key commodities. “They haven’t cut back on quality; they still want quality, but they have gone very, very conservative.
“For the rest of this year, we don’t expect any increase in sales. They are so conservative. This country has not really felt the full effect of inflation because we’re selling the merchandise, the hard goods, which were bought six months ago at that price. Last year we were selling corn beef for $1.99, and this year $2.39, but if we were to use today’s price it would be $3 or over.
“There is a shortage of cooking oil, but we have the greater part of a year’s supply so we won’t have to ask for the current market price. We will sell it at the price from six to eight months ago, when it was reasonable.”
However, Mr Roberts said the reimposition of 10 percent VAT on so-called “breadbasket” foods such as cooking oil, corn beef, evaporated milk, flour and margarine, had not dampened their sales volumes. “I know that we’ve had a fantastic increase in the sale of breadbasket food items,” he added. “That’s 20 percent of the merchandise that represents 80 percent of your sales.”
The Super Value chief also asserted that Bahamians will not enjoy food cost savings should they elect to shop in Florida and import. Returning to corn beef, he added that Florida prices were more than double The Bahamas’ at $5.32. He added that it was the same with sugar, which in the US state costs around $5.
“There are many items we buy on the world market that are cheaper than Florida,” Mr Roberts told Tribune Business. “There’s a lot of items like sugar. Consumers are trying to shop in Miami not knowing they are probably paying more and not saving anything.
“If the cost of living goes up too much they will try to shop in Miami. An item with 42 percent [duty], yes, it will be cheaper, but there’s a lot of duty-free items or those carrying 5 percent and 10 percent rates. There’s a lot of items less than 42 percent duty. If you add freight or shipping charges on, you can’t beat the local price. The airline ticket is going up with the cost of fuel, the car rental is going up, and gas in Florida is $5 a gallon.”
Mr Roberts said Super Value’s ability to import goods via 45-foot containers created economies of scale and savings it is passing on to consumers. “Shopping in Miami creates unemployment,” he added. “Shopping at home keeps the economy going. It recirculates, the money spent at home, but once you send it out the country it’s gone.”
However, Mr Roberts reiterated that Bahamians will likely face high food prices for some time, and said the country must focus on meeting more of its own consumption needs through large-scale production at the consistent quality, price and volume required to achieve this. That, he added, is not happening yet.
“This is going to be the new normal,” he added. “I don’t see it going back to three years ago [before COVID-19]. It’s going to get worse with the war in Ukraine, it’s just going to get worse. It’s not going to go back. We’re just going to have to produce more and grow more, keeping the money at home, although it will still be expensive.”
With Super Value not immune from rising costs itself, Mr Roberts revealed: “For our vehicles, we had to give them a 47 percent increase in gasoline allowance. The accountant told me it was a 47 percent increase. That’s probably up to $6,000 a week. It amounts to a big figure annually, but it’s not going to be as bad as the electricity.
“I hope the electricity doesn’t get too bad. We’re one of the country’s biggest consumers. We’re doing solar, but until we get it all installed we’ll just have to pay whatever rate it is. That’s going to be very hard on the public, just like gasoline has been very hard on them. But the electricity is going to be a much bigger hit than that.
“Leslie Miller (ex-Cabinet minister and BPL chairman) used to say that if Super Value and Atlantis didn’t pay their bill that they couldn’t buy fuel. Years ago, when fuel prices were at their highest, we were paying almost $1m a month for electricity. If that happens again, it’s going to hurt the consumer or hurt the bottom line. I’m hoping they’ve done something to secure the forward contracts so that we don’t get hit as hard.”