‘It’s just not tenable’: cost of living crisis hits sustainability sector | Small business

With just one week left until Christmas, shoppers are hurrying to choose their final presents – and retailers are vying for much-needed year-end custom.

For many of the UK’s small businesses, the cost of living crisis has hit profits. For those whose mission is sustainability, the knock-on effect has been dramatic.

The independent sustainable products retail sector enjoyed rapid growth during the early months of the Covid-19 pandemic lockdowns, with entrepreneurs launching start-ups from home and a boom in online shopping.

However, the economic weather has changed dramatically since last Christmas, with many shoppers prioritising cheaper gifts rather than sustainable ones. Add in the disruption to supply chains and increased cost of doing business caused by Russia’s invasion of Ukraine – and in some cases Brexit – and the result is hundreds of independent businesses closing this year, while many more are struggling to stay afloat.

Fay Watts, director of The Dispensary, in Salford, is preparing for her last few days of trading before she reluctantly closes her doors for good. At her high street store, she offered a refills service for household products, and for a while, business was booming.

“We opened in 2019 and business was good throughout the pandemic,” she says. “But the last six months have been extremely difficult and I have not been able to pay myself a wage for a year.”

Watts adds that her mental health has suffered as the business struggled and debts mounted. “I never really understood the ‘death of the high street’ before I had a bricks and mortar store. But it’s incredibly difficult to change consumer habits and tough to compete with the convenience offered by supermarkets.”

Zero Waste Path, which started life in an Edinburgh flat in 2018, has been forced to close its EU operation, and the future of its UK business hangs in the balance. Its co-founder, Giulio Corsi, says the sustainability sector boomed for a couple of years but in 2022 “demand has dropped dramatically”, resulting in a 40% loss in sales compared with 2021. “Add to that a rent increase, energy bills at an all-time high, and the escalating cost of ingredients … it’s just not tenable any more.”

Anni Kriesche, founder of London-based company Funky Soap, says 2022 has been the toughest year since her company began trading a decade ago, with Russia’s invasion of Ukraine having a major impact. “As soon as the war started, a lot of our ingredients doubled in price, seemingly overnight,” Kriesche says.

Anni Kriesche of Funky Soap
‘We’ve come this far and we’re not giving up,’ says Anni Kriesche of London-based Funky Soap. Photograph: David Parry/PA

Many suppliers folded and by July she was struggling to pay her staff and discussed liquidating the business with her accountant – “a really low point”. However, a re-structuring has provided a much-needed boost and helped her to seize the opportunity to try new approaches.

Kriesche says: “We have started to look at every ingredient and work out how we can buy it in bulk and cheaper. We have also focused a lot more on gifts and personalisation. We’ve come this far and we’re not giving up.”

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

However, as the cost of living crisis has taken hold, the number of suppliers has dwindled dramatically, the Gills say. They cite several, including Naked Necessities, The Kind Store and The Beeswax Wrap Co, that have folded in 2022, with further closures coming almost daily.

Life Before Plastic products
Charlie and Trina Gill of Life Before Plastic say that 20 of their 100 suppliers have gone under in the past six months. Photograph: Life before Plastic

In the past half year 20 of their 100 suppliers have gone under. November turnover was down more than 50% year-on-year.

“For us, it means less choice and fewer makers to support,” says Trina. “We’re in the gifting season now, and you can really see the drop-off.”

The cost of sales has also risen with the sisters having to incentivise customers with discounts or free gifts. “This is pressure that comes from big companies who can afford to have sales. For us, ultimately, it is coming out of our pocket.”

Trina explains that although zero-waste products usually last longer than cheaper alternatives, the higher price tag makes them prohibitively expensive for those living paycheck to paycheck.

Brexit has also had a knock-on effect. “It became prohibitively expensive to sell to Europe because customers had to pay postage as well as 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 another online sustainable products retailer, Vera-Bee, has also experienced a “definite downturn” in recent months, saying revenues are down by about 30-35% year-on-year.

Webb’s business was founded in 2019 in her studio in West Sussex, stockinghandmade, plastic-free items made by other small UK businesses. As the enterprise prospered she rented a larger commercial unit but has now moved back to her studio to save money. “Attracting new business is very hard at the moment. Vera-Bee is my only source of income so I have had to tighten my belt.”

However, Webb remains quietly optimistic. “Loyal customers that we’ve had for two to three years are staying; they understand what we’re doing.”

Dean Harries, co-founder of sustainable shaving products brand Shoreline, says the seasonal boost in retail sales from Christmas shopping has started a month later this year, “towards the end of November”.

Harries says: “People visibly had less money to spend after that first energy bill landed on the doormat … a lot of people have had to deprioritise sustainability.”

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

Shelley Brown, founder of The Good Life, which has two stores in Stockport, also says trade has “drastically dropped” this year and her focus has shifted to “just surviving”.

Brown says many of her regulars are having to return to supermarket shopping. She has adapted by selling online but admits it has been “extremely challenging and stressful”.

Trina and Charlie Gill are also adapting in order to survive the year ahead, offering corporate gifting and training for firms who want to improve their ESG (environmental, social, and corporate governance) credentials.

Trina says: “The cost of living crisis has been the nail in the coffin for lots of small businesses who are often not doing it for profit, but because they care. If they aren’t leading the way, who is? It’s not politicians.”

As Watts locks up her shop door for the last time, she sums up the mood: “Money is tight at the moment, but we have to ask ourselves what we value and where we want to spend our money. Investing in local, sustainable businesses is investing in a future we surely all want.”

This article was amended on 20 December 2022 to clarify that Zero Waste Path has announced the closure of its EU operation, not its UK business.

Simonne Stigall

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