FEATURED STORY

THE RISE OF WAGES AND THE AUTUMN STATEMENT: HOW DOES IT AFFECT RETAILERS?

As we are all probably aware of by now, the National Living Wage will inflate by 9.8 per cent to £11.44, with the Low Pay Commission recommending that the people eligible for the NLW be reduced from the age of 23, to 21. In addition to this, the National Minimum Wage for 18-20 year olds will increase by 14.8 per cent, bumping up to £8.60.

This information, alongside the Autumn Statement released just last week, has made us at C-Talk think about the impact it will have on the convenience retail sector, and what it currently means for retailers as a whole.

With the new rates coming into effect next April, it’s important that retailers pay attention to any and all updates.

While the Autumn statement is a broader update on the economy and business policies and affects retailers from a financial perspective one way, the rise of Minimum/Living wages affects retailers in another.

Importantly, both parts play a massive role in shaping the economic landscape and overall support of workers’ rights. When workers are paid a higher wage, it also means that they have more purchasing power, allowing them to be able to afford/spend more on retail products and services.

Thought there is the looming fact that wage increases will need retailers to invest more financially, the Autumn Statement works alongside this very well; with Chancellor Jeremy Hunt MP announcing the extension of the 75% rates discounts, as well as freezing the small business rates multiplier. Both of these help retailers greatly by providing stability and relief and not increasing their tax burden.

“It’ll affect youth recruitment, and retailers won’t be hiring 18 year olds anymore. They’ll bring them in earlier and be trained up,” notes Amit Puntambekar, retailer of Ash’s Shop Nisa Local, “Most of our kids are on £8.50-£9.50 but that’s fully trained, competent and independent. £8.60 then to spend 3-6 months training someone is too expensive.”

Jimmy from Premier Jimmy’s Stores says, “It’s going to add approx.. £10k to our wage bill- do I tell my staff they have to work harder then they already do? At the same time risk losing them? Margins need to go up. The government has given them a pay rise from our pockets, but people think it’s the government that’s given them something.”

In addition to this view, Dee Sedani from One Stop Matlock, Derbyshire agrees with, “It amazes me that they won’t give the NHS staff a pay rise in the percentage we have had as they can’t afford it, but yet they made us do it because it’s out of our pockets- double standard. The public are blind to it; give in one hand, take more from other hand.”

Should any retailers be worried about their finances, the Autumn Statement has also noted additional measures such as alcohol duties (including beer, wine, cider and spirits) being frozen until August 1st next year.

Not only will this provide retailers with the relief of not having one more thing to pay for, but it also allows businesses within the alcohol industry to relax and allows them more time to plan their pricing and financial strategies without the added burden of higher costs. Competitive prices mean potential to attract more customers, after all.

Another measure worth noting form the statement is the Employee National Insurance rate being cut from 12% to 10% on January 6th 2024; from a worker viewpoint, it’s beneficial in the sense that their take-home pay is increased, providing them with more financial flexibility.

It can also make employment more attractive for individuals and potentially stimulate job creation, allowing the convenience retail sector to expand even more. It’s a move that can benefit both employees and the overall economy, as well as shop owners whose staff could do with a little monetary drive.

However, this monetary drive in regards to the rise comes with its own downsides, as mentioned above. Matt Roberts, Head of Retail at Dougalls Group, says, “The impact on our wages due to this change is concerning for the business. Considering the current challenges related to the cost of living if we do try to find this through increased margins / pricing there is a risk of losing customers to larger retailers and discount stores, which could further exacerbate the problem.

Even if we were to raise prices, it is unlikely that the margins would sufficiently offset this cost. This is also going to impact inflation across the board next year which is contradictory to everything the government has been talking about with regards to wage increase over the last 18 months… Gets them a vote though, and doesn’t cost them a penny.”

“We’ve chopped the hours we used to give 15-18 year olds every evening,” Sandeep Bins, retailer are Welcome (Coop) Faversham, tells us, “Approximately 15-20 hours a week, just to cover the raise.”

Trudy Davies, retailer at Woosnam & Davies also says, “This wage raise affects everything in retail sector & beyond. The government making themselves look good to the country at the expenses of all businesses? It could just be the final nail in the coffin of some of us small retailers – I actually love retailing & my store but I am actually wondering if I should retire from the store.

The wage increase will come out our profits it will stunt any growth as no investment money is left after increases. They say we should innovate to survive but investing in innovation & new tech is getting a lower priority in our stores as funds / profit is lower & lower every year.”

The statement has also introduced a legal right for employers to pay into workers’ existing pension pots, further allowing them financial flexibility, even in the far future.

On the other hand, a way in which the statement benefits retailers is that local authorities will be able to recover full costs of business planning applications to process applications quicker (and if not, the fee will be refunded to the retailer). This ensures efficiency within the industry.

This can be especially beneficial for retailers who are eager to open their doors and start serving customers, or retailers with existing stores that need or require an upgrade.

All in all, the contradiction of the Autumn Statement to the rise in wage pose many perks for retailers within our sector (though the rise in wage alone is daunting in itself). Retailers may be assisted much more in terms of tackling the increase in wage by the measurs to be put in place, such as alcohol duties being frozen, quicker processed applications, etc.

Our advice to retailers would be to focus on their business and do what they feel is right- as at the end of the day, only you know how to operate it best!

SHARE THIS POST

Share on facebook
Share on twitter
Share on linkedin

YOU MAY ALSO LIKE...