Independent retailers are struggling to absorb rising costs as the government prepares to introduce the latest hike in the National Living Wage (NLW).
The NLW rate will go up by 4.4% on April 1 from £7.50 to £7.83. Two years ago, the minimum wage stood at £6.70, increasing to £7.20 when the NLW was introduced in April 2016 for employees aged 25 and above. The rate has increased by more than 15% since March 2016.
Chris Pollard, owner of Barlby Village Stores, Selby in Yorkshire, has opted to put up his prices, instead of getting rid of staff.
“Even two years ago, I was paying a lot less,” he said, “now it’s well over £10,000 a year per person. Products are also costing more so everything has a knock on effect. I may be forced to put prices up further in the future because it won’t be long until the National Living Wage is £9 and then £10.”
Mo Razzaq, owner of Family Shopper in Blantyre, Glasgow, has been forced to change how he recruits new staff.
He said: “It used to be the case that you could think carefully about which local people you employ but that is not the case anymore. Over the last few years, the increases have forced retailers to give jobs to younger people to make savings.
“Margins are being cut and energy manufacturers are not being fair so the National Living Wage keeps adding to the pressure on our finances.”
Arjan Mehr, owner of Londis Bracknell in Berkshire, added: “Retailers cannot cut back and cross-subsidise the wage bill any longer. Most businesses have been cut to the bone and any more increases would then have a negative impact on shoplifting and security, never mind holiday cover, sickness etc.”
Ralf Patel, owner of The Look-In, in Woodmansterne, Surrey, has also been hit hard by the NLW. “Many retailers are now working incredibly long days and probably couldn’t even afford their own wages, let alone those of their staff! It’s hardly surprising that a growing number of retailers are deciding to sell up and what’s particularly troubling is that it’s the younger retailing generation, the one with the loans on new property, who are probably being hit with the highest overheads.”
Joe Williams, owner of Hook Norton Village stores, in Oxfordshire, has re-structured the management in his store in order to balance increasing costs and valuing his employees.
He added: “It’s true that costs are rising across the board and staff costs are one of the biggest areas of expenditure. Despite this I’m actually recruiting for a new manager at the moment to replace an employee who is leaving.
“After this I plan to totally reorganise my staffing structure by removing the ‘supervisor’ role and re-training the core team so that they are all more capable and multi-skilled. I pay slightly above the National Living Wage and will continue to do so despite the coming rise, but in return I do expect quite a lot from my staff.”