With imminent National Insurance Contribution (NIC) and National Living Wage (NLW) increases set to add an estimated £5 billion to retail’s wage bill this year, retailers are trying to lessen the burden of rising labour costs on their businesses. Instead of implementing price hikes or cutting headcount, AI offers a viable – but so far untapped – alternative lever, where improved productivity and staff engagement mitigate wage tax challenges, Legion Technologies’ 2025 State of the UK Hourly Workforce report suggests.
Original research of over 1,000 UK retail and hospitality workers reveals that while 65 per cent of retail managers now recognise the need to automate their labour operations, just 19 per cent currently use AI-driven scheduling tools – leaving substantial efficiency gains unrealised.
“Raising prices risks alienating inflation-weary, price-conscious consumers, while cutting frontline staff threatens customer service and risks lost sales. AI offers an alternative approach and comes at the problem from the other side of the coin. Rather than passing on costs to consumers or cutting back on staff, retailers and hospitality providers can leverage AI to improve the productivity and engagement of existing staff,” Eoin Houlihan, VP Europe at Legion Technologies, commented. “And this makes investment in technology to boost labour efficiency and retention imperative.”
The report also found that managers of hourly employees are struggling with time-consuming manual processes, which presents an efficiency drain that businesses facing rapidly rising labour costs can ill afford. Scheduling, managing compliance, and tracking time and attendance are particularly onerous.
Almost two-thirds (65 per cent) of managers spend over three hours per week on scheduling tasks, while a further 52 per cent spend more than three hours every week on time and attendance tasks. These inefficiencies drain time that could be better spent on strategic activities, such as coaching and team development, which 62 per cent of retail managers say would be their preferred use of regained time from administrative tasks, as well as interacting with customers (33 per cent).
“With AI-driven workforce management, managers can reclaim valuable time and refocus their efforts on high-impact activities that benefit both their teams and customers,” Houlihan added. “Just as importantly, they can instantly create flexible schedules that match business needs with employee skills and preferences, which improves staff engagement and retention.”
Almost three-quarters (72 per cent) of hourly retail employees polled by Legion state that schedule flexibility is the top factor influencing job decisions, while over half (51 per cent) cite inflexible scheduling as a major retention challenge.
Share