Retailers are bracing themselves for tomorrow's introduction of the new National Living Wage (NLW), expecting to be amongst the hardest-hit of all businesses by the new regulations.
From April 1, companies must pay staff aged over 25 the new compulsory minimum wage of £7.20 per hour if they are to avoid heavy penalties. However, some face difficult choices in order to pay for the higher wage bill.

Last October the Federation of Small Businesses (FSB) surveyed its members to find out how they expected to adapt to the new NLW.

Well over a third (38%) of small employers thought it would negatively impact their business, while just 6% said it would be positive. And businesses in the wholesale and retail sectors were amongst those most likely to say the NLW would have a negative impact.

Businesses which said they would be negatively impacted were asked how they would adapt to the NLW. Just over half (52%) said they would put off hiring new staff while 50% would raise prices.

Other steps included: cutting staff hours (41%), reducing staff numbers (31%), cancelling or postponing planned investments (29%) and eroding pay differentials by freezing or cutting the wages of higher paid staff (26%). Almost a third of businesses owners expected to absorb the cost through reduced profits (29%).

A poll run on diyweek.net following last year's announcement of the NLW introduction also showed that staff could ultimately be a casualty of the new wage. When DIY businesses were asked if it would cause them to review staffing levels, 28% said they would pay more and that it wouldn't affect the number of staff they had or needed, while 33% said they already paid a living wage - a total of 61% not expecting to be hit.

However, a significant 39% said they would have to restrict or cut back the number of staff they had.

The NLW is set to increase to approximately £9.15 per hour in 2020.