Toy retailers face minimum wage hike

We ask our panel of toy retail buyers how the planned minimum wage increase to £6.31 for adults and £5.03 for 18 to 20 year olds from October will affect them, if the Government should do more to help businesses seek funding and what their in-store theatre strategy is
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 “[The increase in minimum wage] can only be a good thing, putting more money in consumers hands which will hopefully cycle in sales.

 ’The Real Living Wage’, an independent organisation, has actually worked out what it costs to live, so we have taken a bit of a different view [to the increase]. We need to make sure that our costs only increase in line with our turnover. It is a challenge, but it’s one that we greet with open arms because we acknowledge that our lower paid employees probably need that pay rise. In the grand scheme of things, it will probably have an effect on head count.

 “Also it’s significantly harder [for businesses to secure funding] and I think the government should do more to help [them] grow.

“It’s important that the market doesn’t get swallowed up by the giants as monopolies would make pricing less competitive and limit the range available for consumers.

“But the market is tough. There doesn’t seem to be anything picking up the slack {of declining LEGO and Moshi sales} and driving footfall. We have on average three to five character visits every week and two brands showing good signs of making an impact are Turtles and Doc McStuffins, but it’s just a very soft market.”

Stuart Grant, Buying Director, The Entertainer

“There is no doubt that retail is extremely difficult at present, and wages are our most significant overhead. If minimum wage increases by two per cent every year, our margin needs to increase for us to earn the same.

“Meanwhile, margins are decreasing annually due to price increases on products, so it becomes difficult to manage.

"Without [our bank and our suppliers] we couldn’t be as aggressive as we have been over the last few years and there are few opportunities [to expand business] in this climate.

"However, I am really looking forward to seeing if [Doc McStuffins] can continue to build the momentum and be a real contender for this year while character appearances is how we differentiate from the ease of online shopping. The experience a customer receives can make them a customer for life."

Brian Simpson, Manager, Toytown

“Any increase in costs represents a challenge in this trading environment and members are very aware of the impact of [the minimum wage increase]. Most will look again at opening hours and staff numbers and reductions here will fund the increase in wage rates so the total wage bill does not rise.

“Furthermore, funding for small businesses continues to be tight and while the Bank of England continues to demand that banks strengthen their balance sheets the amount of credit available will be constrained.

“Promotions continue to be key to driving sales and less and less toys are being sold that are not promoted in some way.”

Ian Edmunds, Operations Director, Toymaster

“We already pay above minimum wage. We look at a variety of ways of rewarding our staff and salary is just one of them.

“We feel the government should be doing more to encourage people into work and support small businesses. There are a huge number of grants available in other industries that don’t seem readily available in retail.”

Helen Gourley, Toy Hub owner

“Character visits are something we have considered and hope to plan going forward. In-store theatre is very important.

“Finally, our own label ranges have performed well above plan proving that customers wil buy great toys regardless of brand.”

Tom folliot, senior toys buyer, Sainsburys.

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