Increase in National Minimum Wages is having a “detrimental effect” and “negative impact on profitability” of convenience stores at a time when they are already reeling under increased cost of food, fuel and energy.
As per the new directions, National Living Wage for over-23 is now £8.91 to £9.50 an hour. This increase in the minimum wages to UK workers came into force on April 1, benefiting about two million people.
The increase in minimum wage tends to touch upon the lives of store workers as well. As per Statista, convenience stores provide around 392,000 jobs as of 2021.
The new rates, which were announced in October, came just in time as household budgets were facing mounting pressure because of the soaring cost of living.
However, the increase has put extra pressure on convenience store owners who were already facing a reduction in footfall as well as basket size and average spend due to constantly increasing prices and spiking energy bills.
London retailer Pete Patel is resorting to working smartly and cutting down as many extra hours as possible. He has five convenience stores, all under Costcutter fascia, in addition to a Bargain Booze outlet.
“The increase in minimum wage has obviously had a negative effect on my profitability. We are also now looking at how we can get the staff to work smarter, so we don't need as many hours,” Patel told Asian Trader.
Shahid Razzaq
South Lanarkshire-based retailer Mo Razzaq echoed similar sentiment when he revealed how this recent increase in minimum wage has only added to a slew of expense pressure.
“We already had inflation. We also were facing an increase in electric and gas bills. Not to forget a massive increase in petrol and diesel prices. Now this increase in minimum wages is having a detrimental effect on our business,” Razzaq told Asian Trader.
Inflating Yet Shrinking
According to the Lumina Intelligence UK Convenience Market Report 2021, the sector grew by 6.3 percent in 2020, pushing its value up to £43.1 billion.
However, the cost of living crisis is affecting stores as well. Shoppers are choosing discounters over local stores to seek cheapest possible prices and discounts.
The cost of food and fuel in the country has risen sharply, with inflation reaching 9 percent in April — the highest in 40 years. The same month, annual energy bills jumped by 54 percent, amounting to an extra 700 pounds a year on average for each household. Another energy price hike is expected in October, as Russia’s war in Ukraine and rebounding demand after the pandemic push oil and natural gas prices higher.
The prospects for the coming months remain gloomy. Experts have predicted that price rise, exacerbated by the Russia-Ukraine conflict, will have long lasting effects, spilling to next year as well.
A recent report from the International Monetary Fund said the U.K. is expected to be the slowest-growing economy out of the Group of Seven leading democracies in 2023 as the war sets back the global economic recovery from the pandemic.
iStock image
Before the minimum wage was introduced, there were concerns that it would cost jobs, because business owners would compensate for their higher wage expenses by hiring fewer people. Some argued that increases in minimum wage put pressure on businesses and will increase unemployment as businesses seek to protect their bottom line.
This year, the concern is seemingly turning out to be partly true. Although there is no data or evidence to claim that there is an overall loss of jobs linked to the minimum wage, the latest increase in the minimum limit is having its own subtle ripple effects.
Like in cases of small and medium convenience stores, owners are refraining to hire more staff even if there is a requirement. Retailers, to cut down expenses and maintain the profitability of their businesses, are now making extra effort to manage with the present staff and making sure not to expand their workforce.
Patel, who has stores in Brockley, Derbyshire and Brentwood, Essex, informed how he is trying to keep minimum-possible staff though he also does not want to reduce the strength further knowing it will damage the whole system.
“Since we are trying to keep minimum staff, we are running on a tight shift. I don't want to reduce staff even if I want (to cut down the cost) because then that will just reduce the customer service level and other stuff,” he said.
“Since the overall cost is shooting up, we have to be a lot more careful, especially during people's holidays and other stuff. All we are trying is not to put extra staff as it will put extreme pressure and leave me robbed of profit margin,” he said.
The average salary for grocery store jobs is £31,787, with highest pay seen in Central London and lowest in Stoke-on-Trent.
Traditionally, the retail industry has its own way of responding to wage increases, mainly among which are improving workers’ efficiency, investment in technology to automate low-skilled jobs and hiring more under 23s.
This year’s 6.6 percent increase is hurting the retailers more than before.
Like Patel, retailer Razzaq too is rationing strictly on working hours so as to cut down as much extra expense as possible.
“Right now, I am concentrating on managing my workforce efficiently and trying to cut down extra hours,” he said.
Razzaq too claimed that despite struggling with this recent increase in staff wages, he has still not cut down his work force.
He also informed that apart from this aspect, he is working on cutting costs on everything else as well to “tighten the business as much as possible without having a service setback on customers”.
A recent survey by NerdWallet claims that 73 percent consider issues with staff retention a threat to their organisation. 70 percent of small and medium business leaders stated that difficulties in recruiting new employees pose a major threat to their business. More than one in four (26 percent) consider recruitment issues to pose a major threat to their business, says the report.
Contrarily, both Patel and Razzaq denied facing any workforce availability issue at the moment. Their core issue remains to cut down expenses and be more efficient when it comes to maximum utilisation of their resources.
Although present in every segment and industry, it is retail, care and hospitality sectors that account for a large number of minimum wage jobs. The new guidance is supposed to cover everyone including part-time workers, casual, agency workers, piecemeal workers, apprentices, trainees, workers on probation, disabled workers, agricultural workers, foreign workers, seafarers or offshore workers.
Higher Prices, Lower Profits
Increase in wages may be impacting small and medium businesses in these decades-high inflationary times but the move seems to have done its bit in uplifting low-paid workers as well.
According to a new analysis from the Resolution Foundation published last week, the share of low-paid workers in the UK has hit a record low and is on track to be "eliminated" by 2024.
The report found that the introduction and elevation of the minimum wage has helped to reduce low pay this year to a joint record low of 13 percent in 2021.
However, the number of low-earning self-employed has gone up, says the report.
Separate data from the ONS showed average wages continued to fall behind the rate of inflation. Earnings in March shot up by 9.9 percent on the year, regular earnings excluding bonuses fell by 1.9 percent although wages excluding bonuses jumped 4.2 percent in the first quarter.
(Photo by JUSTIN TALLIS/AFP via Getty Images)
The figures suggest that the latest 6.6 percent increase in the national living wage will not do as much as ministers had intended. New minimum wage rates are proposed each year by the Low Pay Commission. There is an explicit government target for the National Living Wage – two-thirds of the national median wage by 2024, conditional on wider economic conditions.
However, average wage growth, despite being accelerated, is still failing to keep pace with inflation.
According to a last year’s survey, 21-23 percent of retail firms said they had responded to past minimum wage increases by raising their prices.
As stores may not have the ability to reduce profits, it seems likely that they will respond to the minimum wage increase by adjusting their prices and figuring out further the best possible ways to make their workers more productive.
1. One in five people who have successfully quit smoking in England currently vape, with an estimated 2.2 million individuals using e-cigarettes as a smoking cessation tool.
2. The increase in vaping among ex-smokers is largely driven by the use of e-cigarettes in quit attempts, with a rise in vaping uptake among people who had previously quit smoking for many years before taking up vaping.
3. While vaping may be a less harmful option compared to smoking, there are concerns about the potential long-term implications of vaping on relapse risk and nicotine addiction. Further research is needed to assess the impact of vaping on smoking cessation outcomes.
ABOUT one in five people who have stopped smoking for more than a year in England currently vape, equivalent to 2.2 million people, according to a new study led by UCL researchers.
The study, published in the journal BMC Medicine and funded by Cancer Research UK, found that this increased prevalence was largely driven by greater use of e-cigarettes in attempts to quit smoking.
However, the researchers also found a rise in vaping uptake among people who had already stopped smoking, with an estimated one in 10 ex-smokers who vape having quit smoking prior to 2011, when e-cigarettes started to become popular. Some of those smokers had quit for many years before taking up vaping.
The study looked at survey data collected between October 2013 and May 2024 from 54,251 adults (18 and over) in England who reported they had stopped smoking or had tried to stop smoking.
“The general increase in vaping among ex-smokers is in line with what we might expect, given the increasing use of e-cigarettes in quit attempts. NHS guidance is that people should not rush to stop vaping after quitting smoking, but to reduce gradually to minimise the risk of relapse,” lead author Dr Sarah Jackson, of the UCL Institute of Epidemiology & Health Care, said.
“Previous studies have shown that a substantial proportion of people who quit smoking with the support of an e-cigarette continue to vape for many months or years after their successful quit attempt.
“However, it is a concern to see an increase in vaping among people who had previously abstained from nicotine for many years. If people in this group might otherwise have relapsed to smoking, vaping is the much less harmful option, but if relapse would not have occurred, they are exposing themselves to more risk than not smoking or vaping.”
For the study, researchers used data from the Smoking Toolkit Study, an ongoing survey that interviews a different representative sample of adults in England each month.
The team found that one in 50 people in England who had quit smoking more than a year earlier reported vaping in 2013, rising steadily to one in 10 by the end of 2017. This figure remained stable for several years and then increased sharply from 2021, when disposable e-cigarettes became popular, reaching one in five in 2024 (estimated as 2.2 million people).
The researchers found, at the same time, an increase in the use of e-cigarettes in quit attempts. In 2013, e-cigarettes were used in 27 per cent of quit attempts, while in 2024 they were used in 41 per cent of them.
Senior author Professor Lion Shahab, of UCL Institute of Epidemiology & Health Care, said: “The implications of these findings are currently unclear. Vaping long term may increase ex-smokers’ relapse risk due to its behavioural similarity to smoking and through maintaining (or reigniting) nicotine addiction. Alternatively, it might reduce the risk of relapse, allowing people to satisfy nicotine cravings through e-cigarettes instead of seeking out uniquely harmful cigarettes. Further longitudinal studies are needed to assess which of these options is more likely.”
Independent retailers association Bira has held a meeting with members of the Treasury team to discuss concerns following its robust response to the Government’s recent Budget announcement.
The Budget, labelled by Bira as "devastating" for independent retailers, was met with widespread indignation from Bira members.
Andrew Goodacre, CEO of Bira, said: “Thank you to all the members who have shared their thoughts on the impact of the budget. Based on this feedback, Bira has been robust in its response and judgement of the budget, especially where it is hurting the medium sized independents by as much as an extra cost of £200K per annum.
“We have also held a meeting with members of the Treasury team to discuss our concerns. Whilst there were no indications that any changes would be made, our concerns were listened to.
“We also discussed the proposed reform to business rates which is due to be in place for April 2026. It was clear from the meeting that Bira will be fully involved with this reform.”
Bira, representing over 6,000 independent retailers across the UK, earlier stated that the reduction in business rates relief from 75 per cent to 40 per cent (capped at £110k) from April 2025 will more than double costs for many retailers.
As a post-budget reaction, Goodacre said on Oct 30, "This is without doubt the worst Budget for independent retailers I have seen in my time representing the sector. The government's actions today show complete disregard for the thousands of hard-working shop owners who form the backbone of our high streets.
"Small retailers, who have already endured years of challenging trading conditions, now face a perfect storm of crippling cost increases. Their business rates will more than double as relief drops from 75 per cent to 40 per cent, while they're hit simultaneously with employer National Insurance rising to 15 per cent and a lower threshold of £5,000, down from £9,100. Add to this the minimum wage increase to £12.21, and many of our members are telling us they simply cannot survive this onslaught."
East of England Co-op said it has improved labour productivity whilst improving customer service delivery in-store with an Electronic Shelf Label (ESL) solution from Pricer, the leading in-store automation and communication solutions provider.
Established in 1861, East of England Co-op is now the largest independent retailer operating in the East of England. In addition to the 120 food stores it operates in the region, the regional cooperative also offers customers specialist services, such as funerals, security, travel agents and petrol filling stations across Essex, Suffolk, Norfolk, Cambridgeshire and Hertfordshire.
Having announced the roll-out of Pricer’s ESLs to its entire store estate in March, East of England Co-op now uses Pricer’s solution, powered by its cloud-based Plaza platform, to centrally manage and control pricing, product information and promotions across all its ESLs.
Eliminating the need for manual updates, the ESLs deliver real-time price and promotions updates, reducing the risk of pricing errors and ensuring accuracy and efficiency in shelf-edge operations.
The solution also drives overall store efficiency by enabling store colleagues to focus their efforts on customer-focused and value-adding tasks that deliver store performance.
With the new ESL solution now deployed in around 40 per cent of its retail estate, East of England Co-op has already seen significant boosts to labour productivity, drastically reducing the manual effort of store colleagues in maintaining shelf-edge processes, including printing and tearing label strips as well as replacing paper labels.
Before it was spending tens of thousands of labour hours each year completing manual shelf-edge processes, now it estimates labour time that would have been spent on maintaining traditional paper labels has been reduced by 70 per cent.
This also allows store associates to focus time on customer-facing, service-oriented tasks to improved customer experience in-store. Additionally, the move to ESLs has also helped East of England Co-op reduced store printing costs by 50 per cent as well as saving paper use and waste from traditional physical labels.
“The standout aspect of our ESLs Programme is the collaborative spirit Pricer has fostered within the delivery team,” Stephen Lamb, head of program delivery, East of England Co-op, commented.
“This partnership has navigated the challenges of an intensive change programme, demonstrating resilience and adaptability while exceeding the original scope of price and promotion for tangible benefits. Built on a foundation of trust, the feedback from our Co-op technical teams, business units, store colleagues and Pricer highlights how we’ve worked together to seize opportunities.”
Peter Ward, UK country manager at Pricer, said: “We know driving labour productivity in-store is a key focus for retailers, who want to be able to leverage one of their most important and valuable assets – their store staff – to those tasks that drive the most value to customers. Through ESLs, East of England Co-op has freed store associates to serve, deliver efficiency gains and customer experience enhancement, whilst still achieving all the automated operational requirements to effectively merchandise and maintain the shelf-edge.”
PayPoint Plc has on Thursday has announced a robust financial performance for the half year ending 30 September, making continued progress towards achieving an underlying EBITDA of £100 million by the end of FY26.
The company’s UK retail network increased to 30,151 sites during the period, from 29,149 at the end of the previous fiscal year. 70 per cent of these are independent retailers, and the rest in multiple retail groups.
The group reported a 20.6 per cent year-on-year increase in underlying EBITDA, reaching £37.5m, and a 23.4 per cent rise in underlying profit before tax to £26.9m.
“This has been a strong half year for PayPoint where we have delivered a positive financial performance,” Nick Wiles, chief executive, said.
“The resilience of our businesses combined with the growing opportunities to deliver value-add solutions to our clients, continue to underline our confidence in building further momentum in our key growth building blocks.”
Wiles said consumer behaviour has improved from a slow start in April although remains subdued, with broader economic indicators demonstrating the continuing challenging environment for UK consumers.
“We are now putting greater focus on harnessing our enhanced platform through better connecting our increased capabilities and achieving greater collaboration across the business as a whole, opening up more revenue opportunities to the benefit of our clients and customers,” he added.
Total revenue rose by 6.7 per cent to £135m, with net revenue increasing by 6.0 per cent to £84.6m. PayPoint's Shopping division, a cornerstone of the business, saw net revenue grow by 2.5 per cent to £32.9m, supported by a 10.3 per cent increase in service fees. Card payment revenue also grew marginally by 1.2 per cent to £16.6m, despite a 2.8 per cent dip in total card processed values to £3.6 billion.
The UK retail network increased to 30,151 sites (31 March 2024: 29,149), with 70.0 per cent in independent retailer partners and 30.0 per cent in multiple retail groups
The E-commerce division reported the most substantial growth, with net revenue surging 56.9 per cent to £8.0 million. Parcel transactions soared by 47 per cent to 61.9 million, buoyed by the expanded Collect+ network, which now spans over 13,400 sites, with further expansion planned to support volume growth and the rollout of Royal Mail partnership.
The Love2shop segment saw net revenue climbing 7.4 per cent to £18.m. The division processed £67 million in billings during the period, reflecting the success of corporate API integrations and a restructured new business team.
The Payments and Banking division experienced a slight decline, with net revenue dipping by 0.8 per cent to £24.9m, attributed to the phasing out of legacy energy bill payments and reduced cash transactions.
The group has also introduced a new strategic focus, described as the “seventh building block,” which aims to connect PayPoint’s diverse capabilities across payments, rewards, gifting, and loyalty solutions to drive growth.
Despite the challenges posed by a subdued consumer environment in the UK, Wiles said the business remains confident in its growth trajectory.
“Our core characteristics of strong earnings growth, cash flow generation, and capital discipline, along with the continued growth across the group, give the board confidence in delivering further progress in the year and meeting expectations,” he said.
UK claimants announced Wednesday legal action against US pharmaceutical and cosmetics giant Johnson & Johnson, alleging that women diagnosed with cancers were exposed to asbestos in the company's talcum powder.
J&J risks UK court action for the first time over the allegations, having faced a series of similar lawsuits in North America.
KP Law, the firm representing about 2,000 claimants, said "women who have been diagnosed with life-changing and life-limiting cancers were exposed to asbestos contained within the company’s talcum powder".
In response Erik Haas, J&J's worldwide vice president of litigation, said "Johnson & Johnson takes the issue of talc safety incredibly seriously and always has".
Haas added that J&J's own analysis found an absence of asbestos contamination in its products and said "independent science makes clear that talc is not associated with the risk of ovarian cancer nor mesothelioma".
J&J has until the end of the year to respond to a letter sent on behalf of KP Law's clients, following which documents will be filed in the High Court.
The law firm is representing predominantly women regarding the case, and says it has been contacted by thousands more, adding that some have died of their cancers.
Lawyers claim that the US-based corporation knew "as early as the 1970s that asbestos in its talc products was dangerous but failed to warn consumers and carried on producing and selling the products in the UK until as recently as 2022".
J&J said that Kenvue, its former consumer-health division that it separated out in 2023, is responsible for "any alleged talc liability that arises outside the US or Canada".
"Decades of testing by experts... demonstrates that the product is safe, does not contain asbestos, and does not cause cancer,” Kenvue said in a statement.
However, in September, J&J increased its offer to settle talc claims relating to ovarian cancer in the US to around $8 billion (£6.32bn) to be paid over 25 years.
Earlier this year, the company agreed to pay $700 million to settle allegations it misled customers about the safety of its talcum-based powder products in North America.
The company did not admit wrongdoing in its settlement but withdrew the product from the North American market in 2020.
The World Health Organisation's cancer agency in July classified talc as "probably carcinogenic" for humans.
A summary of studies published in 2020 covering 250,000 women in the US did not find a statistical link between the use of talc on the genitals and the risk of ovarian cancer.