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.
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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.
A shopper gazes at empty shelves that contained bottled water in a supermarket in Falls Church, VA, as a severe snowstorm hits the Washington D.C. area February 5, 2010.
Big-name retailers such as Walmart are increasingly using analytics to blunt the impact of one of the most unpredictable performance variables of shopping: weather.
Weather data, once used strictly for inventory planning, is now helping retailers localise advertising and decide when to discount seasonal items such as sweaters.
Walmart, whose inventory planning with artificial-intelligence software incorporates weather analysis, reduced sunscreen prices a couple weeks earlier than usual this year in parts of the US. Weather data forecasting a wetter-than-usual autumn in some US regions was a factor in its decision, whereas several years ago, it likely would not have been, said Kirby Doyle, a skin-care category replenishment adviser to the world's biggest retailer.
"In the beginning, (weather data) was just a forecast model for high-level planning," said Doyle, who works for Beiersdorf, which makes personal-care products. "Now we’re infusing it into pre-season planning and throughout the season to diagnose the impact of weather, and for things like scheduling promotions.”
A niche group of weather consultants — from Germany's Meteonomiqs to US firms Planalytics and Weather Trends International — is using breakthroughs such as cloud computing to process once-unimaginable amounts of data.
Demand for such data is growing amid heightened weather volatility due to climate change. The National Retail Federation in the US, which is chaired by a Walmart executive, issued a report with Planalytics in July, recommending retailers pay more attention to weather analysis.
New weather-data tools, centred on pricing, may soon be hitting the market. Planalytics and BearingPoint, a management consultancy, are partnering to build software retailers can integrate into their analytical models for setting prices.
“Weather is something you can’t control,” BearingPoint managing consultant Ryan Orabone said at an industry workshop last month to unveil the new initiative. “But you can control the analytics. And pricing, you absolutely control.”
It is natural for a warm October, like this year's in the US, to cause retailers to sweat ahead of the holidays. "It needs to get cold for our business to really perform well in Q4,” Tractor Supply CEO Hal Lawton said last month on a quarterly call.
The company, which uses weather analytics, sells cold-weather products like heating pellets and outerwear.
Weather analytics can help companies like Tractor Supply decide whether to discount winter items, said Planalytics CEO Fred Fox, whose clients include Dick's Sporting Goods and Ross Stores.
If November temperatures in the US drop below 2023 levels - which forecasts suggest is likely - a discount now could mean a missed opportunity later, Fox said.
As intuitive as that may seem to a retailer, they do not always get it right.
In August, Lowe's chief financial officer Brandon Sink cited cold, wet weather in May as the reason for weaker sales in the prior quarter.
But that description is inaccurate, said Bill Kirk, founder of Weather Trends, whose clients include Target, Gap, and Tractor Supply.
May was indeed wet, Kirk's data shows, but not cold. It was the hottest May in six years for the US, he said, and third-hottest in four decades. "Welcome to the world of retail excuses not based on facts," he said.
Rising temps, rising demand
About every three weeks in the US, a natural disaster causes $1 billion or more in damages, according to the US National Oceanic and Atmospheric Administration, up from once every three months in the 1980s.
Planalytics, which uses computer models to help retailers understand how weather affects sales, is on pace to provide clients with twice as many models in 2024 as it did last year, said Evan Gold, the company’s executive vice president of partnerships. Since 2019, that figure has shot up ninefold.
Retailers typically see weather's impact in foot traffic and sales, said Stefan Bornemann, head of Meteonomiqs, whose clients include retailers using the e-commerce platform Shopify. "The impact could get bigger, given more severe weather patterns,” he said.
Kirk has analysed how sales for a given product rise or fall with each degree of temperature change. Sales of horse blankets rise 7 per cent per degree colder and Starbucks coffee sales climb 2 per cent, he said.
Some clients use Kirk's data for so-called dynamic pricing, the practice of adjusting prices to demand. If a sales season looks particularly weak, clients may implement small markdowns early, rather than be forced to impose larger ones later to clear excess inventory, Kirk said.
The days of retailers using weather as an excuse for a poor earnings season should be over, he added.
“Wall Street hates that excuse,” Kirk said. “What you’re saying to your investors is, ’We can’t control our business.’”
Supermarket Sainsbury’s has become the first grocer to extend its Aldi price-match campaign to its 800 local convenience store outlets.
In a bold move by its boss to win back market share from the German discounter, Britain’s second-largest supermarket chain today (4) has added price matches on 200 daily staples — including milk, chicken, bread and vegetable oil — in its local convenience stores.
Simon Roberts, chief executive, told The Times that he had decided to roll out the campaign because customers had told him that they “really love the convenience of Sainsbury’s Local, but would really like to see value on the products we buy most often.
“What we’re seeing from customers is that they want to be sure they’re getting the best value.
“UK grocery is one of the most, if not the most competitive markets in the world,” Roberts said. “What we’ve seen is lots of new, smaller supermarkets grow in the UK, and so we have to be competitive on everyday products that customers buy, in order for them to be confident in our value.”
He added that matching with Aldi prices “gives customers real confidence”, particularly when shoppers’ budgets are squeezed.
The Aldi price-match scheme will replace Sainsbury’s “pocket friendly prices” campaign, which launched last year to help customers find cheaper items in its Local shops more easily.
Sainsbury’s is targeting between 20 and 25 new Local stores each year, as part of its ongoing expansion plan, which includes opening more larger-format supermarkets. It will open a new convenience shop at Edinburgh Airport in December, in a unit previously occupied by Marks & Spencer. It will be Sainsbury’s first airport store.
“Whether on the way to work, or travelling from a station, local stores play such an important role in people’s lives," Roberts said.
Waitrose is to open 100 new convenience shops over the next five years as part of a £1 billion investment, while Marks & Spencer unveiled plans to open ten new convenience stores this year and renew up to 50. Morrisons plans to open 400 more of its Morrisons Daily convenience stores, with a wider goal of hitting 2,000 smaller stores in 2025.
A convenience store owner in Glasgow has retired and handed over the keys after serving the community for 44 years.
The retiring shopkeeper couple, Abdul Haq and his wife Hameedah, have run Disqu Blu convenience store in Glasgow since 1980.
Speaking to a local media, Haq explained how for past 44 years, he have been working from 6am each morning, seven days a week, - equating to nearly 200,000 hours in the shop.
He said his favourite part of the job has always been the interactions with customers who he will miss chatting to.
“I always speak to all my customers,” he said. “I’m that kind of person. I love people, and I enjoy speaking to everyone that comes in. I’ve got customers who have moved away, but when they come back to Glasgow they always pop in to see me. I love that kind of thing. It’s very personal.
“The people around here are lovely. I’ll miss them very much.”
“It was always going to be time to retire at some stage,” he said. “I probably should have retired years ago! But I just love being here. I’ve met so many nice people. I’ve got a lot of good memories from this place.”
The couple has run Disqu Blu since 1980. Though Haq will no longer be working in the shop - which was originally a tobacconist stocking Disque Bleu cigarettes, hence the distinctive name - he won’t be settling down into a dressing gown and slippers anytime soon.
“I’m not going to sit in the house all day,” he said. “I think I’ll do some charity work. I want to learn Arabic as well. I can read it but I can’t really speak it. So I’ll learn that, then I can travel around the Middle East. And I’d like to see more of Scotland. I’ve never been around the country much, working in here all the time, but I’d love to explore more of it.”
Haq's daughter Farah was only a year old when her parents took the shop.
“It’s more than just a business,” she said. “They’ve been here so long that customers have grown old with them, and become family and friends. We’ll miss it, because it’s been such a big part of all our lives. We’ve all grown up in here and done our bit in the shop, so it’s been very much a family business.
“It’s an emotional time. But I think it's the right moment for them to retire now. It’s a whole new chapter.
"I’ve really lucked out with my parents. They’re amazing role models. They’re so hardworking, and they’ve really given back to the local community. I look up to them a lot. Everyone knows them around here, they all call my dad Chiefy and my mum Mrs Chiefy. It’s a real community feel, which you don’t really get these days with supermarkets.”
innocent drinks, Europe’s leading healthy drinks company, is announcing a new partnership with Alexandra Rose Charity as it advances its mission to help people live well through the delicious goodness of fruits and vegetables.
Government statistics reveal that just one third of adults, and 12 per cent of 11–18-year-olds, are managing to get the recommended “Five a Day”. This is even starker for lower-income families, with the most deprived fifth of adults consuming 37 per cent less fruit and veg than the least deprived, and their children 29 per cent.
innocent is launching its partnership with Alexandra Rose Charity by teaming up with Co-op, to help donate a portion of fruit & veg for every smoothie bought in stores. The charity helps families in need to buy and eat more fresh fruit & veg. Until 19th November 2024, innocent will donate the cost of a portion of fruit and veg (£0.24) to the Alexandra Rose Charity for every “Mango & Passionfruit” and “Strawberry & Banana” smoothie sold in UK Co-op stores.
innocent’s partnership with Alexandra Rose Charity will see a total of 520,000 portions of fruit & veg donated by the end of the year through the charity’s Rose Vouchers for Fruit & Veg Project. Rose Vouchers are given out to families every week, helping them to afford fresh fruit and veg from local markets for them and their children.
John Taylor, General Manager for UK & Ireland, innocent Drinks commented,“At innocent, we’re on a mission to help make sure everyone can access the delicious goodness of fruit and veg - its why our drinks are crammed full of the stuff. Eating a wide variety of fruit and vegetables is key to a healthy and nutritious diet, but we know that lots of us aren’t getting enough of it. Lower-income families face significant barriers to ensuring they can give their children the nutrition they need.
"Our partnership with Alexandra Rose Charity, and campaign with Co-op marks an ongoing commitment to helping improve access for everyone so they can unlock the health benefits of a balanced diet.”
Jonathan Pauling, Chief Executive at Alexandra Rose Charity, commented, “We are thrilled to be working with innocent Drinks and the Co-op to raise awareness of the challenges that families up and down the country are facing in affording to put healthy food on the table for them and their children. Food related ill-health costs the UK 98 billion a year, to the NHS, the economy and society.
"The long-term consequences of a lack of access to healthy food has a detrimental effect on health, wellbeing, and life chances. Through the funds raised from this promotion, we will be able to help families in need to make sure they can give their children the best possible start with a diet rich in fresh fruit & veg.”
Sinead Bell, Co-op’s Commercial Director, commented,“Supporting campaigns that address the issue of food poverty and access to food is important to us and the millions of Co-op member owners, and we are proud to be partnering with innocent on this fantastic initiative across our stores.”innocent drinks and Co-op team up to donate portions of fruit and veg
As the final key retail season of the year approaches, Nisa retailer NP Group is gearing up for Christmas with a renewed focus on store activation and point-of-sale (POS) strategy to drive sales following a successful Halloween.
With seasonal shopping trends in full swing, effective in-store activation and visibility are crucial for smaller retailers to capture customer attention and keep up with larger competitors. Data from Retail Economics shows that UK shoppers spent approximately £10 billion on seasonal products in 2023, with Halloween contributing £650 million alone, marking a steady increase in seasonal shopping over recent years.
POS and store activation remain pivotal in capturing these sales opportunities, as shoppers are more likely to make purchases when displays are both visually engaging and convenient to access.
Anthony Furnell, Head of Retail Operations at NP Group, which operates six stores, has significant experience in retailing. From his background with major retailers and suppliers, he understands that capitalising on seasonal periods is critical for convenience stores.
“Seasonal activation is really important. It’s a very competitive sector, and we’re not just competing with large supermarkets; we’re competing for convenience and ease for our customers. If a customer doesn’t see it, they don’t potentially buy it, so activation is key.”
NP Group’s Halloween strategy this year exemplifies how store activation can capture attention and improve sales. The Darwen store has allocated a dedicated Halloween space, complete with a hanging spider from the ceiling, vinyl window displays, and strategic POS items like floor stickers and overhead signs. This dynamic approach engages customers, driving incremental purchases and creating a one-stop shop for seasonal needs.
However, it’s not one-size-fits-all; each store location is tailored based on size, layout, and customer demographics.
“Our Menston store, for example, is our smallest, so we have to be selective about our seasonal range. Space is key—making sure the displays are in the right place is essential,” Anthony notes. “We’ve also have a group store WhatsApp to share best practices and ideas across locations, ensuring a cohesive yet unique seasonal activation for each store.”
Planning and evaluation are equally important in maximising seasonal sales. To meet the varying demands of each store, NP Group conducts pre-sales planning and end-of-season evaluations, which allows them to better anticipate the stock and POS materials required for future seasonal events.
“By evaluating what sold well and what didn’t, we can refine our approach and ensure we’re offering the right products in the right places for customers,” explains Anthony. “Seasonal displays and POS act as magnets that draw the eye and engage customers on a whole new level. In today’s fast-paced retail environment, it’s vital to have a captivating, well-organised space for seasonal items that entices shoppers, encourages browsing, and, ultimately, drives incremental sales.”
In addition to Halloween, Christmas activation is also underway, with stores gradually introducing festive products.
According to Anthony, “Christmas is another significant period where creative, well-placed POS and choice can create a festive in-store experience, encouraging customers to shop locally and find what they need without visiting larger stores.”
Both Halloween and Christmas offer strong opportunities for convenience retailers to increase footfall and improve basket spend. The rise in seasonal spending in convenience settings, combined with strategic activation, ensures that stores remain competitive and relevant for shoppers seeking both impulse buys and essential items.
For retailers, these activation strategies not only boost sales but also enhance customer satisfaction by creating an engaging shopping experience that keeps them coming back throughout the winter season.