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Retailers ready for living wage, but smaller firms worry about rising costs

Fashion and footwear retailers of all sizes are understood to be ready for next week’s shift to the national living wage of £7.20/hour for staff aged 25 or over.

High street

However, many smaller firms are concerned about the impact of introducing the government’s longer-term goal of paying this age group £9/hour by 2020.

Michael Weedon, deputy chief executive of the British Independent Retailers Association, said: “£7.20 is not a great stretch in wages as most are there or there about. But to get to £9/hour in four years’ time requires four compound increases of at least 6% year on year, and the problem keeping many [independents] awake at night is where that growth is going to come from.

“Many will amend hours and cut staff in order to pay it.”

Blair Daniel, manager and buyer at menswear indie Concept Store in Aberdeen, echoed this view: “When it gets to 2020, we will have to put prices up, as it will be impossible to trade as we are with the costs going up so much. Big chains can absorb the cost but smaller retailers can’t afford it.”

William Coe, managing director of the six-store Coes department store group, said: “I think it will have a tremendous impact – effectively the base rate is going rise by almost 50% over five years, and this will have a cumulative impact upon wage rates above this level.

“It means that all retailers will have to focus on employee productivity and processes to ensure overall profitability is not severely impacted.”

The living wage comes into effect on April 1.

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