High oil prices are driving up costs and squeezing consumers’ budgets. Nick Britton finds out how five different businesses are coping with the crisis

High oil prices are driving up costs and squeezing consumers’ budgets. Nick Britton finds out how five different businesses are coping with the crisis

Ranjan Singh
CEO, isango! (retailer of travel experiences)

I’m an optimist. I believe oil prices will soften because of the slowing of the economies of the US and Western Europe, and high inflation in India and China. In the meantime, it’s true that people are putting off their fancy holidays to Australia or Costa Rica, but they’re still taking holidays closer to home, and we’re catering for that by strengthening our offerings in the UK and Europe. We’re analysing our customer data like mad to see how needs are changing, and we need to be agile in our response. Of course, I would be stupid if I said the state of the economy won’t have an impact on us, but as we don’t sell flights or hotels, our revenues are less dependent on the things people are cutting down on.

Paul Delves
MD, Harry Tuffins (supermarket chain)

We reckon our cost of goods has gone up three or four per cent in eight months, while the cost of services has gone up 25 to 30 per cent, mainly because of fuel costs. We can’t ask our customers to pay a lot more because they’ll go elsewhere. That means we’ll take a massive hit on our margins. It’s going to get worse too – the effect of the recent rise in oil prices on other commodities hasn’t been fully felt yet. Having said that, I’m confident that we can weather this. Last week, our sales were up 14 per cent year on year, so people realise that we’re still competitive. We’re also offering 10p a litre off fuel when you spend £60 in the store – that costs us a bit, but it does get people through the door.

Stewart Yates
CEO, TFM Networks (virtual network operator)

The single biggest expense, both for us as a company and for our employees, is travelling. There’s not only the cost of the fuel, but the fact that time spent driving is not productive. We have one customer in Newcastle that we visit four times a year. We’re based in Buckinghamshire, so it costs us £2,000, not counting the man hours lost when the employee is driving. To reduce costs, we’re installing videoconferencing systems for key clients, which involves a one-off expenditure of £250 and allows us to talk to them whenever we want. We’re also encouraging employees to work from home where possible to keep their costs down, while making sure we maintain a team environment by creating opportunities for staff to socialise.

Paul Ziolek
Operations director, Oakland International (supply chain specialist)

Fuel costs are a nightmare. Our spend on transport this year will be about £1.8 million, roughly £330,000 higher than last year, based on the same turnover. On the other hand, fuel price increases make food suppliers look for ways to reduce their transport costs. That has led to an increase in enquiries for us. In the past ten weeks, we’ve increased our pallet utilisation from 75 to 85 per cent, whereas if a small supplier is sending their own pallets out daily, their utilisation is probably 40 to 60 per cent. Finally, we’ve given our staff an above-inflation pay rise because we recognise that they are using their own fuel to get to work.

Charlie Mullins
MD, Pimlico Plumbers (London-based plumbers)

We deal with 1,400 jobs a week, so we spend a lot on fuel. The most important system we have to minimise fuel costs is a tracker fitted to all vehicles that pinpoints where any plumber is and allows us to send him direct to the nearest job. We try to keep people inside their own areas. Another money-saving innovation is our material delivery service, which circles around different jobs and means engineers don’t have to leave their work to collect parts. We use motorbikes to deliver small parts over long distances, and we’re looking at scooters with a built-in carrier that can take larger parts. We’ve always been aware of fuel costs, but in the past month we’ve seen prices increase rapidly, so we’ve had to redouble our efforts.