Whoever it is that forms a Government after today’s General Election, one thing is certain – employment costs will be going up in that period.
The main parties have committed to varying promises on wages, ranging from a target of 60% of median earnings for the existing national living wage to a £10 minimum wage for all workers by 2020, but all propose increases that will have an impact on thousands of convenience businesses.
We know stores are already under pressure to cut staff costs, with 74% of retailers already having to reduce the number of staff hours in their business as a result of the living wage, and expectations about increasing staff hours in the future at an almost three-year low.
As a result, many stores are likely to reach a fork in the road in their business, where they will either have to invest in technology to reduce staffing costs through things like self-service tills, or double down on the importance of their staff and the value that they bring to the customer experience.
On a recent study tour to London’s Shoreditch, we saw both of these options in effect in stores that were trading successfully but with very different business models.
One had a single member of staff on the shop floor looking after eight self-service tills, while the other had staff all over the place facilitating tastings, running a coffee counter and serving customers.
These stores were just a few hundred yards away from each other, which shows that it’s not necessarily just the location and size of the store that’s important, it’s knowing your customer base and how they will react to change.
There is no single correct answer to the question of what to do on employment costs, but as wages continue to rise, convenience stores will have to strike the right balance between technology and staff presence to ensure they meet the needs of customers.