George Osborne’s summer Budget last week turned a lot of heads - especially among independent retailers. I am no different; the first thing that came to my mind was: operating costs will go up, and my bottom line will be affected.
We have been hit by a double blow: indie sales will fall further once the multiples will be able to extend Sunday trading hours; plus, we will now have to pay staff the new national living wage. I have worked out that as of April 2016, when the new wage kicks in, it will cost me an extra £11,500 a year in wages. Add to that the projected sales losses on Sundays and you’re looking at a considerable sum for an independent to absorb - all at a time when our sector is already being affected by the discounters, which have led to the mults slashing prices of everyday goods, with a knock-on effect on our own sales and pricing.
Don’t get me wrong, I am all for paying staff a fair wage. In my business, we have always prided ourselves on paying more than the minimum wage, but the new living wage is a different step altogether. I will be quite frank: I am now looking to evaluate my teams on whether they are worth £7.20 an hour. It’s not a task I look forward to.
The other dilemma I have is that we have recently developed our store with great support and help from our symbol group Londis. This has enabled me to grow my business and we have had to recruit more staff.
We need the extra manpower to grow our business further and offer excellent customer service. We pride ourselves on availability and speedy stock replenishment as well as transaction time at the checkout. You can’t get these things right without having a sufficient number of employees, and we’ve invested a lot in development programmes to ensure our staff have the training and support they need.
With wages now set to jump up significantly through the national living wage, these investments can suddenly look like a lot of extra cost.
I have been clear in my business: we will continue to invest. But how many others will find themselves forced to cut back in light of the impact the living wage will have on the day-to-day running of their businesses? How many will lose out on growth opportunities as a result?
We will have to wait and see what the full impact will be, and resist any knee-jerk reactions in the meantime. Never underestimate the passion and drive of independents but there’s no question this Budget will be testing that passion and drive more than ever before.
Jatinder Singh Sahota is owner of Max’s Londis in Isle of Sheppey