With the British Retail Consortium (BRC) and leading retailers warning that unprecedented staff tax bill hikes triggered by the Budget will cause ‘inevitable’ retail job losses, consumers are also concerned about the impact of rising retail wage bills, according to the latest research by the Retail Technology Show (RTS).
Original research of over 1,000 UK shoppers by RTS showed that six in ten (62%) were concerned that spiralling labour costs prompted by tax hikes on National Insurance (NI) and the National Minimum Wage (NMW) could mean retailers struggle to keep staff on. A further two thirds (67%) feared that these significant rising cost pressures would equate to fewer staff in-store, impacting customer service and overburdening the already pressured workloads of retail associates.
With the Budget having what the BRC’s chief executive, Helen Dickinson, described as a “disproportionate effect” on retailers and their supply chains, which cumulatively employ 5.7 million people in the UK, last month, a PMI survey suggested UK businesses had already started cut staff numbers at the fastest rate since the financial crisis. Fashion retailer, New Look, said it would accelerate its store closure programme ahead of the tax increases in April, while Next boss, Lord Wolfson, said it was eying labour cuts – either through fewer workers or fewer hours per employee – after facing a £70million rise in wage bills.
However, the prospect of fewer staff in-store remains a key concern for shoppers, with eight in ten (79%) of those polled by RTS saying retailers will struggle to deliver customer experience (CX) with fewer staff. And, with over half (55%) saying store associates ‘make or break’ whether they convert, and two fifths (41%) spending more in well-staffed stores, the role of frontline retailer workers remains a critical differentiator for CX delivery, conversion and loyalty; 78% of UK customers are more likely to become repeat purchasers if they receive good service from staff in-store.
However, while consumers acknowledge retail businesses will be adversely impacted by the tax hikes in the Budget, over half (55%) say large retailers should accept these rising NMWs as part of their social responsibilities. A further 71% say they are more likely to shop with retailers who are known for taking good care of their staff, with 76% also saying those retailers who look after their staff tend to be the businesses who perform best financially.
As well as job cuts, many retailers are also considering price rises to offset their growing wage bills, with two thirds (67%) of retailers now planning price increases, according to a BRC survey. Earlier this month, Next said it would raise prices by 1% to counteract the £73million increase in staff wages and tax it faces, while Sainsbury’s CEO, Simon Roberts, warned the significant “barrage of costs” borne from the Budget risked “feeding through into higher inflation.”
Meanwhile, other retailers, including M&S, are turning to technology and increased automation in-store in response to the Budget to realise cost-savings and drive up labour productivity and operational efficiencies. However, over three quarter (78%) of shoppers said that more tech doesn’t necessarily equate to better service in-store. Two thirds (65%) felt human-led technology, where staff are supported by – and not replaced by – innovation, would enhance CX, while three quarters (75%) said automation can only go so far in delivering CX in-store.
Matt Bradley, Event Director at RTS, commented: “As if it wasn’t already tough enough, retailers have been dealt yet another blow, and will now need to juggle unexpected and unprecedented hikes to their wage bills all while meeting consumers’ CX demands to drive sales. While technology and innovation deliver many of these answers, retailers will need to effectively find a balance between tech and human-led interaction. This approach not only supports CX and in-store performance, whilst enriching the roles of retail staff in the long-term, ensuring talent is recruited and retained to develop the next generation of retail leaders.”
Leadership and recruiting, retaining and motivating the retail workforce will be one of the key pillars in RTS’s 2025 conference programme. Speaking in a keynote fireside chat on Day 1 on the Headline Stage, Steve Hewitt, former CEO & Chair of Gymshark, will outline how the sportswear retailer effectively led its workforce to grow the business from a £4 million to £1 billion+ pureplay in seven years, while Prerana Issar, Chief People Officer & Head of Corporate Affairs at Sainsburys, will also take to the stage on Day 1, exploring how to lead the retail workforce through volatile trading conditions.
