Now that the national minimum wage has been extended to include teenagers aged 16 and 17, the topic of wage costs within the independent retail sector has resurfaced. Organisations like the British Retail Consortium, the Association of Convenience Stores and the Scottish Grocers’ Federation are concerned, not by the new £3 hourly rate for young people, but by the adult minimum wage, which will increase by nearly 8% from £4.50 to £4.85 for adults, and from £3.80 to £4.10 for 18 to 21-year-olds in October.
But not all the retailers visiting Batleys Cash and Carry depot in Southampton share these concerns.
David Challen, of off-licence Hops & Grapes in Southampton, says the rise in the minimum wage will not affect his business. “We pay above the minimum rate and over the past two years we’ve increased our hourly rate by 10% each year.” In fact, he says, he is always willing to add another 50p an hour if it means he can employ quality staff. Wages are low down on his list of priorities because the major business costs are utility bills, shop maintenance, rent and rates. Instead of worrying about the minimum wage, Challen prefers to focus on customer service and attracting new customers.
Bhupendra Patel, of Pat’s News in Gosport, is not affected by the increase because only he and his wife work in his CTN shop. However it is the minimum wage that has prevented him from recruiting staff. “Independent retailers need more government incentives to take on staff,” he says. Like many independents, he is concerned about bootleg cigarettes and tobacco. “There’s not a lot we can do. We just try to sweet talk our customers to encourage them to shop with us.”
But Himanshu Pandya, of Best One c-store in Havant, says the national minimum wage has a big impact on his business. “The higher rate means we will have to improve our business and margins to cover it.” But, he says, it is difficult to increase margins in such a competitive market. “The only solution is to shop around in cash and carries and wholesalers to find the best deals.”
Eric Brown, of the Tee Shop in Gosport has an alternative method of absorbing the extra cost of the minimum wage. “I train my staff to be multi-skilled so while they work in the shop they can also do database entry work for my accountancy firm during quiet periods.”
Located on a golf course, Brown’s shop has many quiet periods and he survives by running another business from the premises. “It ensures the staff are active for a full eight hours, so I don’t mind paying above the minimum wage.”
Nearly two-thirds (63%) of independent retailers pay above the national minimum wage. Wages at Dave Challen’s store exceed the minimum and he says he is always willing to add 50p an hour if it means he can employ quality staff.