Despite vocal and repeated calls from retail leaders and industry bodies for the Government to reconsider wage tax increases outlined in the October Budget in the Spring Statement, Rachel Reeves’ speech delivered little in the way of respite for retailers.

While the Spring Statement brought ‘no new pain’ to retailers in terms of further tax hikes, there were no row backs on the wage tax increases and levies from the Autumn Budget, which are tipped to add a further £5billion to retailers labour costs this year, according to the BRC.

Failure to address perfect storm of costs pressures – Bira

Bira, the British Independent Retailers Association, went further, saying the Spring Statement failed to address the ‘perfect storm’ of cost pressures facing independent retailers across the UK, presenting what it described as a ‘High Street Crisis.’

Despite prior calls by the association for greater support on town centre investment, retail crime and economic development, it said the Spring Statement offered “no specific provisions” for the independent retail sector, which faces unprecedented challenges including National Insurance Contribution (NIC) increases, rising business rates and increased wage costs.

“While we welcome the Chancellor’s focus on economic growth, we are deeply concerned that the Spring Statement has overlooked the immediate crisis facing independent retailers. Our members are confronting a perfect storm of rising costs – from the 140% increase in business rates to the National Living Wage rise and NIC changes – all while consumer spending remains subdued.”

Andrew Goodacre, CEO, Bira

Goodacre went on to say that now “many independent retailers are making difficult decisions right now about whether they can continue trading under these conditions.” He urged the Chancellor to “reconsider her approach” and “engage meaningfully” with the retail sector to prevent further closures and job losses.

Mark Williams, Managing Director EMEA, at WorkJam, a workforce management solution for frontline retail workers, added: “With no tax relief initiatives announced and the increase in employers’ NICs just around the corner, the Spring Budget only intensifies the pressure on already struggling retailers.”  

Higher prices, fewer shops and less investment in retail jobs – BRC

As well as job cuts, many retailers are also considering price rises to offset their growing wage bills, with two thirds (67%) of retailers now planning price increases, according to a BRC survey.  Next had previously said it would raise prices by 1% to counteract the £73million increase in staff wages and tax it faces, while Sainsbury’s CEO, Simon Roberts, warned the significant “barrage of costs” borne from the Budget risked “feeding through into higher inflation.” 

“Retailers are facing tough choices as they try to find ways to address the £7billion in new costs this year as a result of increased employer NICs, higher NLW, and the new packaging tax. The impact of this will be higher prices, fewer shops and less investment in jobs.”

Helen Dickinson, CEO, BRC

Retail jobs and retail workers’ wellbeing at risk – Retail Trust

The BRC had already warned that the impact of the October Budget could risk 160,000 part-time retail jobs. And in Decemvber a PMI survey suggested UK businesses had already started cut staff numbers at the fastest rate since the financial crisis.  Fashion retailer, New Look, has also said it would accelerate its store closure programme ahead of the tax increases in April, while Next boss, Lord Wolfson, said it was eying labour cuts – either through fewer workers or fewer hours per employee – after facing a £70million rise in wage bills.

Reacting to the Spring Statement, Chris Brook-Carter, CEO of the Retail Trust, raised his concerns around the impact of rising labour costs on retail jobs and the wellbeing of retail workers, commenting: “redundancies in retail were the highest since the pandemic last year, and more businesses are likely to follow suit.” He went on to say that the Retail Trust was “already seeing a rise in people reaching out to [us] for support [and] this statement will have done little to ease their concerns.”

“We know many retailers and retail workers have been facing an uncertain future following some of the tax rises announced in the Autumn Budget and today’s Spring Statement will have done little to alleviate their concerns… We see this reflected in declining wellbeing across our industry and a rise in the number of people reaching out to the Retail Trust for help. We stand ready to offer even more support to retail workers in the coming months and to assist more employers looking for help on how to manage this uncertainty amongst their staff.”

Chris Brook-Carter, CEO, the Retail Trust

Shoppers also raise concerns about wage bill rises – Retail Technology Show

Consumers are also concerned about the impact of rising retail wage bills, according to the latest research by the Retail Technology Show (RTS). Its research of over 1,000 UK shoppers showed that six in ten (62%) were concerned that spiralling labour costs prompted by tax hikes could mean retailers struggle to keep staff on.  A further two thirds (67%) feared that these significant rising cost pressures would equate to fewer staff in-store, impacting customer service and overburdening the already pressured workloads of retail associates.

Some retailers, including M&S, have said they will turn to technology and increased automation in-store in response to the Budget to realise cost-savings and drive up labour productivity and operational efficiencies.  However, over three quarter (78%) of shoppers said that more tech doesn’t necessarily equate to better service in-store.  Two thirds (65%) felt human-led technology, where staff are supported by – and not replaced by – innovation, would enhance CX, while three quarters (75%) said automation can only go so far in delivering CX in-store.

“As if it wasn’t already tough enough, retailers have been dealt yet another blow, and will now need to juggle unexpected and unprecedented hikes to their wage bills all while meeting consumers’ CX demands to drive sales.  While technology and innovation deliver many of these answers, retailers will need to effectively balance tech and human-led interaction.  This approach not only supports CX and in-store performance, whilst enriching the roles of retail staff in the long-term, ensuring talent is recruited and retained to develop the next generation of retail leaders.”

Matt Bradley, Event Director, Retail Technology Show

However, while consumers acknowledge retail businesses will be adversely impacted by the tax hikes in the Budget, over half (55%) in RTS’s poll said large retailers should accept rising National Living Wage increases as part of their social responsibilities.  A further 71% said they are more likely to shop with retailers who are known for taking good care of their staff, with 76% also said those retailers who look after their staff tend to be the businesses who perform best financially.