Convenience store retailers are seeing their profits squeezed by rising costs, with concerns that the situation will only get worse with the introduction of the National Living Wage.

Association of Convenience Stores chief executive James Lowman warned the wage would be a major concern for small stores, adding to their burden. He said: “Retailers are experiencing cost increases in many areas of their business at the moment, but the two most pressing concerns for retailers in the coming year will be the introduction of the National Living Wage and changes to Sunday trading regulations.”

He said stores would have to make difficult decisions about staff hours, investment and product ranges as costs increased further.

Earlier this month the Northern Ireland Independent Retail Trade Association (NIIRTA) hosted a roundtable event, attended by Members of the Legislative Assembly, to tackle the growing cost burden.

NIIRTA chief executive Glyn Roberts said: “Our local retail and service sector as a whole is facing a perfect storm of costs, such as rates, auto enrolment pensions, National Living Wage, energy as well as the ever-growing burden of red tape and regulation.”

According to a survey by the Forum of Private Business (FPB) almost 90% of small businesses had seen an increase in their overall business costs in the past 12 months.

The report also revealed that 37% of small business owners did not pass rising costs on to customers, bearing the brunt themselves.

Arif Ahmed of Ahmed’s News in Coventry has seen an increase in costs over his entire business. He added: “Electricity, gas, overheads and stock prices have all gone up. People are less willing to spend generous amounts in-store now so if I put my prices up to combat the increases, I am going to lose my customer base.”

He added: “I run the shop without any staff, purely because I cannot afford to employ anyone.”

Price implications

“The higher rate of pay is going to create a knock-on effect right across the industry, and the only way to overcome this will be to put up prices.”

Mark Canniford of Spar Weston-super-Mare

“Deflation is having a damaging effect which, coupled with the increase in minimum wage and introduction of National Living Wage, could leave some retailers in a rather unwelcoming situation.”

Arjan Mehr, Londis Supermarket, Bracknell, Berkshire

Staff costs already hampering jobs

The introduction of a National Living Wage (NLW) next year is “sending shockwaves” through the UK labour market, with many employers scaling back plans to take on new staff, a survey by workforce expert Manpower Group suggests.

The UK jobs market stands at its least optimistic level in three years, according to its Outlook survey, which also finds employers are already reining in recruitment plans for the fourth quarter of 2015.

The Office for Budget Responsibility estimates that the NLW could lead to up to 60,000 job losses by 2020.