Risk and readiness amid disruption in fuel markets
Navigating geopolitical disruption
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Retail & Consumer-facing Businesses
Retail and consumer‑facing businesses are operating in a period of sustained cost volatility and heightened scrutiny, where disruption across energy, transport and global supply chains is directly affecting margins, pricing decisions and customer relationships. Rising fuel, freight and input costs are flowing quickly through supply networks, while availability constraints and logistics pressure are creating operational complexity at the point of sale.
At the same time, retailers are navigating increased consumer sensitivity to price changes alongside closer attention from regulators, governments and the media. Decisions about pricing, promotions, pack sizes and product allocation are often being made rapidly and at the frontline, amplifying legal, reputational and governance risk if not carefully managed.
In this environment, resilience depends on disciplined supplier management, clear and defensible customer communications, robust internal escalation frameworks and close alignment between legal, commercial and operational teams. Proactively stress‑testing contracts, pricing mechanisms and decision‑making processes is critical to maintaining trust, compliance and continuity while preserving flexibility in an increasingly volatile retail landscape.
What this may mean in practice
- Ongoing disruption to global energy markets is continuing to flow through retail supply chains, driving higher costs across freight, fuel, energy and key inputs. For many retailers, this is translating into real margin pressure and difficult pricing decisions
- At the same time, businesses are having to manage supplier cost increase requests while operating in an environment of heightened consumer sensitivity and increased scrutiny from regulators, government and the media. Many of these decisions are being made quickly and at the frontline, often in the context of promotions, availability issues or direct customer interactions
Emerging issues / developments
- Fuel and fertiliser prices have been especially volatile, while higher transport and packaging costs are adding to the burden
- Suppliers seeking to introduce fuel surcharges or accelerate cost pass-throughs
- Pressure to adjust consumer pricing, promotions or pack sizes in an increasingly volatile market
- Greater risk of regulatory, media and political scrutiny of pricing, allocation and availability decisions
- Supply constraints resulting in stock shortages, fulfilment delays or changes to product mix
- Increased complaints and escalation from customers experiencing cost‑of‑living pressures
- Higher exposure to energy and transport price volatility due to shorter contract terms, greater reliance on spot markets or limited hedging options
- Ongoing strain on logistics and delivery networks, leading to reprioritisation, variability in service levels and added operational complexity
- Increased risk of commercial disputes with suppliers, downstream customers, logistics providers and others
Key considerations
- Supply chain disruption: Impacts at the manufacturing (or production) level and right through the supply chain. This can affect goods on the shelf, but also spare parts and capacity to comply with obligations to supply spare parts and provide repair and maintenance services (including in response to consumer warranty claims)
- Transportation issues: Increased costs and delays in delivery. This is an issue for traditional ‘bricks and mortar’ shops (getting goods on shelves), and also online retailers (getting goods to customers). Transportation costs likely to increase.
- Consumer sentiment: An economic, rather than legal, issue but one must expect significant impact on spending patterns which will lead into the next point. This change could manifest in lower economic activity, or a change in the makeup of the usual shopping basket (panic buying).
- Insolvency risks: Through the supply chain and at the shopfront window, one expects increased financial pressure, cashflow issues, working capital stresses, which would be expected to result in an increase in insolvencies. This is an issue for customers (when suppliers, particularly critical suppliers are under financial stress), suppliers (when customers are under financial stress), landlords and financiers. Businesses should consider their supply chain risk and consider steps to mitigate the impact of an insolvency (for example, considering payment terms and fallback planning in the case of critical supplier insolvency). Directors of distressed businesses need to be mindful of their duties and personal exposure and seek early expert advice (for example on safe harbour protection).
- Cost pass‑through: Understanding where increased transport, fuel and energy costs can realistically be passed on to customers, and where legal, regulatory or reputational limits mean those costs need to be absorbed or managed differently.
- Supplier management: Navigating supplier price increase requests carefully and consistently
- Supply constraints: Making practical decisions about substitutions, prioritisation and allocation in a way that is fair, transparent and reduces the risk of regulatory attention or reputational damage.
- Governance and escalation: Ensuring internal decision‑making frameworks allow issues to be escalated quickly and resolved confidently, particularly where decisions are time‑critical and high‑impact.
- Energy and transport procurement: Re‑examining purchasing and hedging strategies to better manage ongoing price volatility, uncertainty in forecasting and longer‑term exposure to disrupted energy and transport markets.
What to think about now
- Review key supplier contracts and commercial arrangements for pricing, variation, force majeure and termination and insolvency risks, and ensure legal rights are aligned with procurement and commercial strategy
- Coordinate legal, commercial, consumer and communications responses to pricing changes, promotions and shortages
- Stress‑test customer communications to ensure clarity, consistency and compliance during periods of price adjustment or limited availability
- Put in place clear internal approval, escalation and record‑keeping processes for pricing and allocation decisions to withstand regulatory or media scrutiny
- Actively monitor complaint trends, regulator commentary and public sentiment to identify emerging issues early and adjust approach where needed
- Retailers will need to consider whether to accept price increases from suppliers to maintain supply. Retailers should be aware of their rights and obligations (both contractual and regulatory) but the reality is that the enforcement of legal rights will lag the commercial imperative of maintaining supply