Customer Login
01780 480 562
Online Reporting
My Dashboard
Log Out
Retailers React
85% of retailers believe a higher living wage will harm their business

After Rishi Sunak announced plans to increase the national living wage by 6.6% from £8.91/hr to £9.50/hr for workers aged 23 and above across the UK, we surveyed 145 retailers to understand their perspective. Retailers were grouped and further surveyed based on whether they felt the impact would be positive or negative.

The vast majority of retailers (85%) [Figure 1], when asked, felt that the higher living wage would have a detrimental impact to their business.

When asked about specific impacts, retailers in the negative group made it clear that they would be more willing to increase prices or reduce staff than accept an impact to their operating profit [Figure 2]. 30% of retailers however, did note that they expected to have less cash to purchase stock. Interestingly, it was common to see that retailers would increase the cost of unpricemarked products to mitigate the impact.

Figure 1: What kind of impact do you think the higher living wage will have on your store?
Figure 2: What impact do you think a higher living wage will have on your business?
'We will be forced to increase the price on plain items to pay for higher wages...'
A Premier Store from the South West

There is some evidence that price-marked (PMP) products increase the trust felt by consumers in c-stores and, according to talkingretail, 83% of retailers feel that PMP's sold faster than equivalent plain packs. Relying on price increases in plain packs could be a risky strategy.

In addition, retailers in the negative impact group are also incredibly pessimistic when it comes to the spending power that the living wage increase will provide consumers. In fact, 97.8% of them do not believe that the increase will have any positive impact on their turnover or basket size [Figure 3].

Despite being more positive about the impact of a higher living wage, 40% of those who answered positively still believe that they will not experience any direct benefit to turnover or baskets [Figure 4].

Instead, the main benefits that retailers expect to see are two-fold. Staff themselves will experience a higher standard of living thanks to higher wages but the business will also benefit in terms of recruitment and staff retention, as they will be offering a healthier wage.

Figure 3: Despite the increase in wage costs, do you feel that a higher living wage will lead to bigger baskets in your store?
Figure 4: Do you think more disposable income will lead to higher turnover/baskets?
'It will increase staff happiness and retention and put more money into the local economy, which is great for small businesses like us...'
A Premier Store from Wales

Independent retailers, like many sectors of the economy have struggled to recruit staff throughout the pandemic recovery as workers look for more meaningful and well-paid employment. It has also been suggested that external factors such as Brexit may also be impacting the number of available applicants per job. Will increasing the minimum amount an employer can pay across the board be the solution to this problem, or will it merely push the benchmark up? Some retailers seem to think so, but the proof will come in time.

Get free insights directly to your inbox
By submitting the above form, you consent to receive insights emails from ShopMate and Retail Data Partnership. Click here to view our privacy policy
Read More