Retailers forced to react to “crippling” rise in National Living Wage

The government recently announced that the NLW will rise by 6.2% to £8.72 per hour for 25-year-olds and above in April, up from the current rate of £8.21 per hour.

A number of retailers said the rise exceeded their expectations and had forced them to make changes, such as reducing staff hours, in order to absorb the extra costs.

Conrad Davies, who employs 135 staff across his four Spar sites in north Wales, said the NLW rise would cost the business more than £80,000 per year.

“I’m completely shocked. There’s obviously going to be a rise in the NLW but not by this much. I expected the wage rise to be in line with inflation, about 2%, but this is crippling,” he said.

“We’ll have to scrap the pay rises we intended in order to maintain the differentiation with managers.

“We’ll have to reduce staff hours and focus on automation such as self-serve tills. Even with the full-time staff we’ll have to talk to them about taking a few hours off. The costs at our post office are also really going up so we’ll have to make major changes there such as reducing hours.

“It wipes out any potential investment just like that. We can’t absorb it.”

Conrad Davies, Spar retailer in Wales

“It wipes out any potential investment just like that. We can’t absorb it.”

Conrad said Costa had agreed to add another coffee machine at one of his forecourt stores, which would cover the wage rises in that store. “We can’t do any more, we’ve made all the efficiencies we can in the store,” he added.

“I’m doing more work than I was 20 years ago. I know some retailers doing 80 hours a week as a result of the wage rises.”

Luton-based Nisa retailer Barry Patel said he would also be cutting staff hours and opening hours, as well as making further efficiencies.

“We’ll cut about 20 hours per week to help cover the extra £200-£300 per week in wage costs,” he said.

“I’m also talking to a supplier about electronic shelf-edge labelling to improve staff efficiencies – and we’re thinking about doing loyalty cards to stay competitive. We now have four Lidls in Luton, one opened a few weeks ago about a mile from our main store.”

Tough choices

Barbara Clements, owner of Spar Clements in Weymouth, Dorset, said her long-serving and “very loyal” team of staff deserved every penny they earned.

She added: “We would have been raising their pay by around 5% anyway, but this latest rise was more than expected. It is a big increase and there’s no doubt that we will have to look hard at the rota and shopping behaviour in a bid to trim back on hours where we can.”

Harj Dhasee, of Nisa Village Stores in Mickleton, Gloucestershire, said: “This is going to cost us an extra £120 a week in wage costs but we are trying to be pro-active rather than reactive and find new ways of generating the extra money to cover the cost.

“We are holding a big staff meeting this week as we think it’s really important that we are open and honest with our staff and involve them in the process.”

Manchester retailer Mital Morar, of Ancoats General Store and Streford Food Hall, said he may have to adjust pricing.

“We were expecting the rise but it is certainly far from ideal. Workload doesn’t change so we won’t be able to cut staff hours so the rise may lead us to adjust our pricing or to target our supply chain and see where else price reductions could be achieved,” he said.

Conrad praised the Association of Convenience Stores for its efforts in raising the issue with the government. “Everyone has to do their bit now,” he said.