Grocery needs good people and in a tight market average salaries compare well with other sectors. But the pressure on the wage bill is rising says Liz Hamson
So people think the food industry is low skilled and low paid. The perception could hardly be further from the truth, according to the first annual salary survey carried out exclusively for The Grocer by Croner Reward, the pay and benefits specialist. The survey, which is based on responses from representatives and employees in food retailing and manufacturing, shows that the average salary compares favourably to those paid by other industries.
Indeed, at £66,500 before bonuses for a director, it is higher than those paid by either business services or mechanical engineering, traditionally considered well-paid professions.
Bill Moyes, director general of the British Retail Consortium, comments: "I am not at all surprised at the robustness of the pay structure. It reflects the fact that the job market is very tight at the moment, not just in terms of competing for good people in the food sector, but also in the wider retail environment. Employers have got to be able to offer strong and competitive salaries."
Vivienne Copeland, director of client services, Croner Reward, adds: "I hope employers realise the need to do something about this myth that the industry is not well paid. This should be used as a selling point to graduates. It shows that retail is more glamorous than it used to be."
The survey also reveals that employees in the food industry received higher pay rises last year, up 3.7% compared to a 2.8% national average. They enjoyed more bonuses and benefits, 55% getting either a company car or a company car allowance compared to 38% nationally. And they felt they had good job security 56% saying they felt secure in their current positions and just 31% seeking to move.
Richard Lago, director of recruitment, Pursuit NHA, says that his company has been typically seeing £70k-plus salaries offered to directors.
"A premium is still being paid for good quality candidates," he says. "Employers are finding it increasingly difficult to find senior staff. That's why we're seeing this level of benefits."
Good performers can get ahead
The survey's findings are substantiated by Stuart Townsend, store manager at Sainsbury's Cromwell Road store in Kensington, London.
"I'm aware of what the rest of the marketplace thinks about food retailing. But in my experience, the food retailing industry is really competitive," he says. "What is particularly encouraging is that there is a lot of flexibility in the pay scheme that allows good performers to get ahead my incentive scheme is very competitive."
He has been particularly impressed, he says, by Sainsbury's approach to career development. "The steps are always the right steps and always at the right pace.
"Most importantly, there is ample stretch in the structure so there is still a long way for me to go."
Townsend joined the company as a student 19 years ago. Since then, he has risen rapidly through the ranks and now oversees a 400-strong team at the flagship store.
He admits he does not understand the public's negative perception of the industry. "It always seems strange that people are impressed if you say you are a bank manager, but less so if you say you are a supermarket manager. "
But, he says, those perceptions are changing. "Increasingly, people are finding food retail more sexy and more fashionable you just have to look at chefs, they're the new pop stars."
The survey reveals, however, that not everyone in the industry is getting the remuneration package they want. Salaries for middle managers did not hold up as well against other industries.
Generally, employers were not as willing as those in other industries to pay into employee pension plans with employers contributing only 5% to 6% to pension schemes compared to a national average of 10%.
And only 22% of the respondents were women, indicating that the industry is still hugely male-dominated.
The BRC's Moyes is not surprised that mid-tier salaries are lower. "The industry is a lot less static than it used to be. More people progress up the career ladder from middle management." And, he points out, while salaries were lower, bonuses were good.
Lago, however, argues that the industry is coming under increasing pressure to cut overheads by reducing its wage bill and that it will not just be the middle managers that suffer as a result. "One of the problems is that supermarket businesses are growing and so is competition for the right people. That means their ability to pay higher salaries is being challenged."
The fmcg market is being hardest hit, he says. "The supermarket chains are still in growth mode, but the fmcg market is completely flatlining. That's having pressure on the marketplace.
"Say, for instance, you've been paying a manager £60,000, and he's been on an annual pay rise of 5%. He's too expensive, but you've got nowhere to move him, because you're not growing.
"It's no surprise companies will be looking at their personnel and saying we could get someone to do this job at a lower salary. They're under pressure to restructure."
This "dumbing down" phenomenon can be seen in the proliferation of jobs in account management, he suggests. Now there are no longer just account managers, but national account managers and senior national account managers.
Lago also puts a different spin on the high level of job security. "Some of these people you'd like to see move on stick around, so we're not getting the movement we would normally get.
"Attrition rates have dropped dramatically from the 7% to 13% that we would normally expect to see at management level," he adds.
Tellingly, no-one in the fmcg sector was prepared to speak to The Grocer about salary issues. There are other ominous signs that the outlook is about to take a turn for the worse. The survey revealed a growing disparity between the bonuses and benefits offered those in more junior positions receiving relatively high bonuses compared to their seniors. And anecdotal evidence is emerging from recruitment consultancies of much lower pay rises being offered with companies no longer allocating 4% for good performance, say, but 2% or even just the rate of inflation.
Lago confirms: "The expectation of a lot of people in the industry is that salaries will go up, but companies want to keep down what is, after all, one of their biggest costs."
The food industry can content itself for now that it offers among the best salaries, incentive packages and career prospects around. Townsend is not the only happy camper turning down offers from retailers outside the food industry because he would rather stay where he is. But the good times will not roll forever. For one, there is the broader economic downturn to contend with. As Moyes points out: "The issue is the macro-economic situation. What this survey presents a snapshot of is the position when the market was good.
"But we've seen a massive fall-off in retail sales since then, so we are looking ahead to a very different retail climate. It's not a case of cutting salaries it is still going to need good senior people and there is not going to be a sudden flattening of hierarchies but the retail market is decelerating, and that will feed through eventually."
The question is: what impact will that have on next year's survey?
Will employers begin to freeze basic salaries in favour of performance-related packages set to increasingly unreachable targets?
And, if employers do start to offer lower salaries, how much harder will it make it for the industry to recruit the right people with the right skills?
{{ANALYSIS }}
So people think the food industry is low skilled and low paid. The perception could hardly be further from the truth, according to the first annual salary survey carried out exclusively for The Grocer by Croner Reward, the pay and benefits specialist. The survey, which is based on responses from representatives and employees in food retailing and manufacturing, shows that the average salary compares favourably to those paid by other industries.
Indeed, at £66,500 before bonuses for a director, it is higher than those paid by either business services or mechanical engineering, traditionally considered well-paid professions.
Bill Moyes, director general of the British Retail Consortium, comments: "I am not at all surprised at the robustness of the pay structure. It reflects the fact that the job market is very tight at the moment, not just in terms of competing for good people in the food sector, but also in the wider retail environment. Employers have got to be able to offer strong and competitive salaries."
Vivienne Copeland, director of client services, Croner Reward, adds: "I hope employers realise the need to do something about this myth that the industry is not well paid. This should be used as a selling point to graduates. It shows that retail is more glamorous than it used to be."
The survey also reveals that employees in the food industry received higher pay rises last year, up 3.7% compared to a 2.8% national average. They enjoyed more bonuses and benefits, 55% getting either a company car or a company car allowance compared to 38% nationally. And they felt they had good job security 56% saying they felt secure in their current positions and just 31% seeking to move.
Richard Lago, director of recruitment, Pursuit NHA, says that his company has been typically seeing £70k-plus salaries offered to directors.
"A premium is still being paid for good quality candidates," he says. "Employers are finding it increasingly difficult to find senior staff. That's why we're seeing this level of benefits."
Good performers can get ahead
The survey's findings are substantiated by Stuart Townsend, store manager at Sainsbury's Cromwell Road store in Kensington, London.
"I'm aware of what the rest of the marketplace thinks about food retailing. But in my experience, the food retailing industry is really competitive," he says. "What is particularly encouraging is that there is a lot of flexibility in the pay scheme that allows good performers to get ahead my incentive scheme is very competitive."
He has been particularly impressed, he says, by Sainsbury's approach to career development. "The steps are always the right steps and always at the right pace.
"Most importantly, there is ample stretch in the structure so there is still a long way for me to go."
Townsend joined the company as a student 19 years ago. Since then, he has risen rapidly through the ranks and now oversees a 400-strong team at the flagship store.
He admits he does not understand the public's negative perception of the industry. "It always seems strange that people are impressed if you say you are a bank manager, but less so if you say you are a supermarket manager. "
But, he says, those perceptions are changing. "Increasingly, people are finding food retail more sexy and more fashionable you just have to look at chefs, they're the new pop stars."
The survey reveals, however, that not everyone in the industry is getting the remuneration package they want. Salaries for middle managers did not hold up as well against other industries.
Generally, employers were not as willing as those in other industries to pay into employee pension plans with employers contributing only 5% to 6% to pension schemes compared to a national average of 10%.
And only 22% of the respondents were women, indicating that the industry is still hugely male-dominated.
The BRC's Moyes is not surprised that mid-tier salaries are lower. "The industry is a lot less static than it used to be. More people progress up the career ladder from middle management." And, he points out, while salaries were lower, bonuses were good.
Lago, however, argues that the industry is coming under increasing pressure to cut overheads by reducing its wage bill and that it will not just be the middle managers that suffer as a result. "One of the problems is that supermarket businesses are growing and so is competition for the right people. That means their ability to pay higher salaries is being challenged."
The fmcg market is being hardest hit, he says. "The supermarket chains are still in growth mode, but the fmcg market is completely flatlining. That's having pressure on the marketplace.
"Say, for instance, you've been paying a manager £60,000, and he's been on an annual pay rise of 5%. He's too expensive, but you've got nowhere to move him, because you're not growing.
"It's no surprise companies will be looking at their personnel and saying we could get someone to do this job at a lower salary. They're under pressure to restructure."
This "dumbing down" phenomenon can be seen in the proliferation of jobs in account management, he suggests. Now there are no longer just account managers, but national account managers and senior national account managers.
Lago also puts a different spin on the high level of job security. "Some of these people you'd like to see move on stick around, so we're not getting the movement we would normally get.
"Attrition rates have dropped dramatically from the 7% to 13% that we would normally expect to see at management level," he adds.
Tellingly, no-one in the fmcg sector was prepared to speak to The Grocer about salary issues. There are other ominous signs that the outlook is about to take a turn for the worse. The survey revealed a growing disparity between the bonuses and benefits offered those in more junior positions receiving relatively high bonuses compared to their seniors. And anecdotal evidence is emerging from recruitment consultancies of much lower pay rises being offered with companies no longer allocating 4% for good performance, say, but 2% or even just the rate of inflation.
Lago confirms: "The expectation of a lot of people in the industry is that salaries will go up, but companies want to keep down what is, after all, one of their biggest costs."
The food industry can content itself for now that it offers among the best salaries, incentive packages and career prospects around. Townsend is not the only happy camper turning down offers from retailers outside the food industry because he would rather stay where he is. But the good times will not roll forever. For one, there is the broader economic downturn to contend with. As Moyes points out: "The issue is the macro-economic situation. What this survey presents a snapshot of is the position when the market was good.
"But we've seen a massive fall-off in retail sales since then, so we are looking ahead to a very different retail climate. It's not a case of cutting salaries it is still going to need good senior people and there is not going to be a sudden flattening of hierarchies but the retail market is decelerating, and that will feed through eventually."
The question is: what impact will that have on next year's survey?
Will employers begin to freeze basic salaries in favour of performance-related packages set to increasingly unreachable targets?
And, if employers do start to offer lower salaries, how much harder will it make it for the industry to recruit the right people with the right skills?
{{ANALYSIS }}
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