Living wage hike puts toy indies in 'challenging position' - ToyNews

Living wage hike puts toy indies in 'challenging position'

The move by the Government will see the current minimum wage upped from £6.70 per hour to £7.20 this month. But the news has our indie retail panel calling for a reassessment of ‘already squeezed margins’
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The livng wage increase will present a challenge to independent retailers that will force the hand of many to reassess current suppliers and operations.

The recent move by the Government to up the current minimum wage of £6.70 per hour to £7.20, and a proposed eventual £9 per hour by 2020, has left a number of UK indies fearing for the future of their business.

The concern has arisen owing to the fact that owners of High Street independent retailers claim to be earning “nowhere near the minimum wage, let alone the living wage”, while in the early stages of their business.

The wage hike will result in a number of retailers taking a closer look at the suppliers they currently work with, all in the battle for what have been called “very squeezed margins”.

“Wages are our biggest overhead and in order to run a profitable business we are already tight on staff hours,” Brian Simpson, general manager at SMF Toy Town told ToyNews.

“Employment law is also heavily weighted against the retailer in terms of getting rid of useless staff, and now I am going to have to pay them more for the privilege of standing around scratching themselves.

“Margins are so tight in retail that our entire operations will have to be looked at in order to minimise the effect of this increase.”

Indies have told ToyNews that they will have to alter their approach to staffing and the suppliers that they work with.

Steve Kerrison, owner of Norfolk’s Kerisson’s Toys, added: “This makes it very difficult for us small guys. What with all the extra cost that small businesses seem to be facing, it’s only going to get harder and harder.

“We try to manage and pay a fair wage already, but this doesn’t make life easy for anyone. And with so many suppliers doing crazy deals with discounters and many more in cahoots with the big boys who can handle these kind of increases, nobody knows where that extra margin is going to come from.”

It’s a concern echoed up and down the country, including in Scotland where Toy Hub founder Helen Gourley is already looking at employing more under 25s, whose rate will remain unchanged, in order to balance the books.

“In terms of staffing, we will have to look at how many extra hours we use staff for, further stretching our own working hours no doubt,” said Gourley.

“We have also chosen to employ younger staff as a result for particular shifts to try and keep our outgoings to a minimum. We always paid above minimum wage, but with margins being squeezed even further in the industry, it is making us look more at our product mix and ultimately our profit margin to make sure we can continue to operate.

“There are certain suppliers we struggle to deal with as a result and we are replacing their products on our shelves with more profitable lines.”

Online competition and business rate increases appear to formulate a battleground in which the struggle for the indie to survive is ongoing, and while the bigger players on the toy retail scene may escape the impending wage increase relatively unscathed, it’s a matter they can sympathise with.

Geoff Sheffield, director of procurement and licensing at The Toy Store, told ToyNews: “The increase in the living wage is a tricky subject. It is important to pay people the right wage to cope with increase cost of living.

“But with retail being squeezed by online and business rate increases on the horizon, where does a brick and mortar retailer catch a break?”

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