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.

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.