The looming crisis in the retail industry is set to create a difficult time for retailers as wage costs continue to enlist a substantial proportion of the shop costs. Retailers are already facing mounting direct and indirect costs, including soaring inflation, rising interest rates, higher energy bills, and fuel costs.
Scottish convenience store retailers are not immune to these challenges and are particularly feeling the pressure. Moreover, retailers also struggle with disrupted supply chains, leaving them with various difficulties to handle. Unfortunately, these adversities are becoming unbearable for retailers, who are facing a ‘cost-of-doing-business crisis.’
A recent report by the Scottish Grocers’ Federation, in partnership with the University of Stirling, stated that the new National Living Wage rate of £10.42 per hour equates to £14 for the retailer. At a time when retailers are already struggling with profitability, the burden of this new cost could significantly impact employment sustainability and business survival.
The “real cost of employment” takes into account all the components of the total pay cost (or ‘on-costs’) and how these costs have risen from the previous year, including statutory sick pay, pension enrolment, statutory holiday pay, coverage staff, and National Insurance employer contributions. As evident in the report, these costs have increased every year over the last eight years.
While the English government has proposed remedies to support businesses, such as freezing the business rates multiplier and increasing business rates relief, Scotland has no such provisions. Thus, the Scottish Government must take urgent action to ease the burden on retailers and ensure long-term damage to the economy is avoided.
Businesses need support during these challenging times to ensure their continuity. Therefore, it is critical that key decision-makers take swift action to alleviate the costs that the retail industry is facing, or the consequences could be severe.
In conclusion, businesses, especially retailers, need immediate support to ensure their survival during these tumultuous times. Only by working together can we overcome the “cost-of-doing-business crisis” and guarantee sustainable growth for the retail sector.
*The post is authored by Pete Cheema, the Chief Executive of the Scottish Grocers’ Federation.*
