Alarm bells ringing for energy costs for retailers and wholesalers as industry calls for action

Ecommerce: power hungry

Ecommerce: power hungry

The retail and wider wholesale industry is calling on European law makers, regionally and across the EU, to act on the energy crisis, warning that the sector faces threats to the future of many businesses if no action is taken.

Ahead of the Energy Council on 30 September, the Director General of European commerce trade body EuroCommerce, Christel Delberghe, launched a paper ‘Retail and wholesale and the energy crisis – an urgent need for support’, highlighting the impact of high and rising energy costs on the retail and wholesale sector and the need for urgent action and for the sector to receive EU and national support. 

She says: “Alarm bells are ringing across Europe over the massive impact of energy costs on the retail and wholesale sector, threatening the future of many businesses. We call upon ministers meeting on 30 September and when implementing the regulation to recognise that our sector needs urgent help. Without such aid, circumstances will put into question our sector’s ability to effectively provide the essential service on which not only consumers, but the many ecosystems in our supply chains rely daily.”

Retail and wholesale operates with very low margins of typically 1-3%. And with companies facing a quadrupling of their energy bills, the cost of energy is in some member states now accounting for 40% of EBIDTA. Tis sees that narrow margin disappearing entirely even with larger operators. This situation is not sustainable, and its effect is already being felt, with many, particularly smaller shops, facing bankruptcy or already closing due to the cost of energy.

In the paper issued earlier this week, EuroCommerce welcomes the European Commission’s initiative to help households and businesses reduce the cost of energy, but asks the EU and member states to recognise the hard truth the sector is already facing.

Industry demands action

According to the pan-European retail trade body, retail and wholesale needs policymakers to act now in a number of ways.

Firstly, there must be action to avert the risk of systemic impact. An urgent reaction is needed to the real threat the present situation poses to the essential service that our sector provides to consumers and the rest of the EU economy. Some 20-50% of retailers are warning that they will go out of business in the near future without support to reduce the cumulative impact of energy costs.

Secondly, the council is being urged to ensure energy prices go down by adopting urgent action to bring down the cost of energy for final customers. This should include as a temporary and exceptional measure during this extraordinary crisis, adjustment of the merit order principle to bring about a reduction in the price of electricity. 

This should also be accompanied by member states reducing national electricity taxes to the minimum (0.5%) allowed under EU law.

Finally, EuroCommerce demands help for what it says is a sector in dire need. The council must ensure that the retail and wholesale sector can fully benefit from schemes reducing the impact of high energy prices –governments have ignored our sector in favour of the manufacturing industry, and this needs to change.

The retail and wholesale sector is a major user of energy – in Germany as much as 35 TW/hrs annually – more than some industries usually considered as large energy users. 

The sector is already investing significantly in saving energy, and it can be a game-changer in reducing Europe’s dependence on imported fossil fuels. It can accelerate energy-saving measures and itself generate a lot more alternative energy. 

But with major pressures from the cost of energy, the rising cost of the products it sells, and consumers reacting to the cost of living crisis by cutting their expenditure, it can only do so with the help of national and EU initiatives. 

This is a message EuroCommerce hopes that policymakers will take to heart and act upon urgently.

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