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Retail Reflections: NLW hits shop owners; UK-EU trading

Alan Monahan writes: Retailers are among those who have reported that they are struggling to meet their growing payroll obligations.

The average Federation of Small Businesses (FSB) employers will pay an extra £2,600 this year as a direct result of the combined impact of this week’s increase in the National Living Wage (NLW), consequential National Insurance costs, and pension auto-enrollment contributions.

According to Gordon Millward, FSB regional chairman, the majority of small businesses were paying all their staff above the NLW rate before it was increased. “Our research also shows that most small business owners absorb the cost of wage increases by taking lower profits.”

He says that increasing numbers of these are not paying themselves or are stopping their own pension contributions to meet new employment costs.
“The Low Pay Commission should now be given flexibility in how to meet the Government’s NLW target. It’s a target that must be adjusted if it becomes clear that the economy cannot bear the pace of NLW increases.”

Following the triggering of Article 50, the British Retail Consortium has sensibly pointed out that the UK should ensure that the terms of its trade relationship with the EU are right before seeking new deals with other countries.

So that British shoppers aren’t hit with the cost of unwanted import tariffs at a time when the pound is already weakened, it emphasises that it is essential that a free and open trading environment be maintained while any new trade deal is phased in.

The UK retail industry employs approximately 120,000 EU nationals who make a huge contribution in every type of role – from the boardroom to distribution centres and customer service.

“Workers from the European Union are part of the reason that British retailers are often able to deliver affordable and high-quality goods,” according to BRC chief executive Helen Dickinson. “The UK’s post-Brexit labour and immigration policy should therefore be framed to enable domestic firms, including retailers themselves, to access the skills they need. Not only would this help our exporters, but it will help retailers keep prices low for British consumers.”

She believes substantive reform to EU-originating legislation must wait until we have officially left the Union. “However, in the meantime, government could draw up an inventory of those existing EU regulatory powers which will be repatriated to the UK and to the devolved governments.” Each in turn should then outline the likely policy approach which will be taken with those powers.

I was interested to read Bronto Software’s Beyond Borders report which identified global sales in a shrinking ecommerce world.

The internet has opened up a shopper’s paradise where you can find and buy anything directly from the home. With a few simple key strokes a consumer can choose products and services from merchants around the globe.

But with the gates to cross-country commerce opened wide, have consumers abandoned their local retailers for sellers abroad?

Bronto’s consumer study reveals that Australians have adopted global shopping much more widely than those in the UK or US. Seven in 10 Aussies have already purchased from a merchant outside their home country, compared with four in 10 consumers from Britain or America.

They all embrace cross-border shopping, but there is a clear preference toward other English speaking countries, although, unsurprisingly, China receives considerable commerce from all three groups of consumers.