Soaring wage costs jeopardising future of Scotland’s convenience stores, according to a new report from the University of Stirling and the Scottish Grocers’ Federation

“Government must start to recognise that local stores are economic drivers and provide many benefits for their communities.”

Escalating wage costs are jeopardising the future of Scotland’s convenience stores and their key role in the communities they serve as they find themselves forced to push up prices at the till, according to a new report from the University of Stirling and the Scottish Grocers’ Federation (SGF).

They claim that while the UK National Living Wage today rises to £11.44 per hour, up 9.8 per cent on 2023/24, the true cost for retail employers will be as much as £15.39 – the highest increase for at least eight years.

The two organisations explain that the study takes into account statutory costs such as national insurance and holiday pay, as well as additional employment expenses including uniforms and administration, adding that a recent survey of SGF members found that more than 90 per cent of respondents said they were less likely to take on more staff because of the wage increases.

'If we value the "glue" that local convenience stores provide to communities, then we need to show this value to them,' according to the report (file image). Picture: Getty Images/iStockphoto.

Furthermore, three-quarters of owners/managers reported working more than 65 hours per week just to keep costs down, and additional staff costs will “inevitably be passed onto customers, many of whom are also struggling to manage their household budgets”, according to the report that will form part of SGF’s annual submission to the Low Pay Commission, for inclusion in its report and recommendations to the Prime Minister later this year.

Professor Leigh Sparks, of the University of Stirling, said: “Convenience and independent retailers find it harder to cope with large increases in the national living wage, despite their recognition of the need to reward staff for the jobs they do. There does come a point when the cost and management of labour, plus the extreme challenges of actually operating local convenience stores, ceases to be viable as a commercial or a lifestyle proposition. If we value the ‘glue’ that local convenience stores provide to communities, then we need to show this value to them.”

Dr Pete Cheema, chief executive of trade body the SGF (which has found that convenience stores provide about 50,000 jobs in Scotland) also commented: “Convenience stores are at the very heart of their communities. Providing valuable local employment, with flexible hours, but the significant increase to wages year on year means that some stores will need to cut staff hours. Impacting local jobs and overall harming the economy. The pressure of absorbing all the additional costs, both external factors and those implemented by government, is putting businesses at risk. Many simply can’t cope.

“Government must start to recognise that local stores are economic drivers and provide many benefits for their communities. Without doing more to alleviate the growing pressure on our sector, and accounting for the total cost of employment on top of new regulation, government are damaging the viability of these essential local business.”

SGF boss Dr Pete Cheema says: 'The pressure of absorbing all the additional costs, both external factors and those implemented by government, is putting businesses at risk.' Picture: contributed.

The report comes as shops in Scotland prepare for their annual business rates bills to rise by £31 million from next week, a jump condemned by the Scottish Retail Consortium. It follows the decision in the Scottish Government’s Budget to increase the business rate for firms occupying 22,120 medium-sized and larger commercial premises by 6.7 per cent in 2024-25, representing the biggest yearly increase in the business rate since 1999.”