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.
Original research of over 1,000 UK shoppers by RTS showed that six in ten (62 per cent) 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 per cent) 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 per cent) of those polled by RTS saying retailers will struggle to deliver customer experience (CX) with fewer staff. And, with over half (55 per cent) saying store associates ‘make or break’ whether they convert, and two-fifths (41 per cent) spending more in well-staffed stores, the role of frontline retailer workers remains a critical differentiator for CX delivery, conversion and loyalty; 78 per cent 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 per cent) say large retailers should accept these rising NMWs as part of their social responsibilities. A further 71 per cent say they are more likely to shop with retailers who are known for taking good care of their staff, with 76 per cent 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 per cent) of retailers now planning price increases, according to a BRC survey. Earlier this month, Next said it would raise prices by 1 per cent 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-quarters (78 per cent) of shoppers said that more tech doesn’t necessarily equate to better service in-store. Two-thirds (65 per cent) felt human-led technology, where staff are supported by – and not replaced by – innovation, would enhance CX, while three-quarters (75 per cent) said automation can only go so far in delivering CX in-store.
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